A Statement of Cash Flows and Its Related Disclosure Note

question 20

Multiple Choice

A statement of cash flows and its related disclosure note typically do not report:

• A) Stock dividends.
• B) The purchase of treasury stock.
• C) A finance lease.
• D) Notes payable issued for a building.

---

Definitions:

Variable Costing

An accounting method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of goods sold.

Operating Income

Earnings from a company's primary business activities, excluding revenues and expenses from investments or other non-operational sources.

Variable Costing

An accounting method that only allocates variable costs to inventory, treating fixed costs as expenses of the period.

Absorption Costing

A method of costing that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.