Which of the Following Statements Is NOT True About More

question 9

Multiple Choice

Which of the following statements is NOT true about more sophisticated financial planning model?

• A) Only fixed costs change directly with sales.
• B) Working capital accounts like inventory, accounts receivables, and accounts payables vary directly with sales.
• C) Fixed assets do not always vary directly with sales.
• D) All of these

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Definitions:

Fully Depreciated Equipment

An asset that has reached the end of its useful life for accounting purposes, having its cost fully allocated to depreciation expense.

Statement of Cash Flows

A finance report summarizing every cash inflow from ongoing business operations and external investments, and all cash outflows for corporate activities and investment purposes, within a set period.

Operating Activities

The primary day-to-day activities of a business involved in producing and selling its goods or services, reflected in the cash flow statement.

Indirect Method

A method used in cash flow statement preparation that adjusts net income for non-cash transactions and changes in working capital accounts to arrive at net cash flow from operating activities.