In a Statement of Cash Flows Prepared Using the Direct

question 10

Multiple Choice

In a statement of cash flows prepared using the direct method,if wages payable increased during the year,the cash paid for wages would be

• A) the same as salary expense.
• B) salary expense plus wages payable at the beginning of the year.
• C) salary expense plus the increase in wages payable from the beginning to the end of the year.
• D) salary expense less the increase in wages payable from the beginning to the end of the year.

---

Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit. This figure shows how much each unit contributes to covering fixed costs and generating profit.

Fixed Costs

Expenses that do not change in total as production volume increases or decreases, such as rent and salaries.

Safety Margin

The difference between the actual level of sales or production and the break-even point, measuring the cushion a company has before it incurs losses.

Break Even Point

The financial analysis term where total revenues equal total expenses, and there is no profit or loss.