If the Actual Level of Activity Is 4% Less Than

question 86

True/False

If the actual level of activity is 4% less than planned, then the variable costs in the static budget should be decreased by 4% before comparing them to actual costs.

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Definitions:

Statement of Cash Flows

A financial report that shows how changes in balance sheet and income accounts affected cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Dividends

Disbursements by a company to its stockholders, often as a profit-sharing mechanism.

Obligations

Legal or financial duties that one party is bound to perform for another, such as the repayment of a loan.

Investing Section

A part of the cash flow statement that shows cash flows from the acquisition and disposal of long-term investments and fixed assets.