Dmitri Company Reported the Following Changes in the Balance Sheet

question 144

Essay

Dmitri Company reported the following changes in the balance sheet accounts between Year 1 and Year 2.
Assume that there were no sales of equipment and that no dividends were declared or paid.

Required:

Given the changes in the balance sheet for Year 2, state:
a. whether the change in each account indicates that an addition or subtraction needs to be made to determine cash flow, and
b. in what section of the statement of cash flows the adjustment would appear. Indicate if no adjustment is necessary.

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Definitions:

Direct Labour

The wages paid to workers directly involved in producing goods or providing services.

Indirect Labour

Labor costs associated with tasks that do not directly contribute to the production of goods or services but are necessary for the operation.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including utilities, rent, and salaries of employees not directly involved in production.

Period Costs

Expenses that are not directly tied to production activities and are expensed in the period they are incurred, such as selling, general, and administrative expenses.