In Preparing a Statement of Cash Flows (Indirect Method),cash Flows

question 56

Multiple Choice

In preparing a statement of cash flows (indirect method) ,cash flows from operating activities

• A) is calculated as the difference between revenues and expenses plus the beginning cash balance.
• B) is always equal to the sum of cash flows from investing activities and cash flows from financing activities.
• C) can be calculated by appropriately adding to or deducting from net income those items in the income statement that affect cash and accruals for current assets and current liabilities.
• D) can be calculated by appropriately adding to or deducting from net income those items in the income statement that do not affect cash.

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Definitions:

Directing

The management process of guiding and overseeing employees to achieve the objectives of the organization.

Worker's Tools Depreciation

The reduction in value of tools over time due to use and wear, attributed to the worker's tools used during production or service delivery.

Factory Overhead

All the indirect costs associated with manufacturing, excluding direct materials and direct labor costs, such as utilities, maintenance, and equipment depreciation.

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a specific product and are an essential component in its production.