There Are Several Types of Adjustments Required to Compute Cash

question 27

Multiple Choice

There are several types of adjustments required to compute cash flow from operations from net income. One adjustment is an addition to net income each year for _____ because it uses no cash during that period.

• A)payments to employees
• B)payments to suppliers
• C)tax payments
• D)depreciation and amortization
• E)none of the above

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Definitions:

Total Raw Materials

The sum of all raw materials that are available for use in the production process, including both those already in process and those in stock waiting to be used.

Direct Labor Costs

Expenses directly associated with the labor used in producing goods or services, including wages for employees who work on the production line.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor.

Work in Process Inventory

Goods that are partially completed in the manufacturing process but are not yet finished products.