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.

Understand the concept of the relevant range of activity for cost behavior.

Analyze the impact of changing production levels on costs and profitability.

Prepare traditional and contribution format income statements.

Identify and calculate incremental manufacturing costs.

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