Cash Flow Statements of Proprietary Funds Must Use the Direct

question 48

True/False

Cash flow statements of proprietary funds must use the direct method for recording cash flows from operations.

---

Definitions:

Variable Cost

Charges that directly correlate with the amount of goods produced or the level of output.

Fixed Costs

Expenses that do not change with an increase or decrease in the number of goods or services produced, such as rent, salaries, and insurance.

Break-Even Point

The point at which total revenue equals total costs, resulting in neither profit nor loss.

Variable Costs

Costs that change in proportion with the level of activity or production volume of a company.