The Direct Method of Preparing the Statement of Cash Flows

question 51

True/False

The direct method of preparing the statement of cash flows is preferred by the Financial Accounting Standards Board.

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Definitions:

Direct Materials Cost

Direct materials cost refers to the expenditure associated with the raw materials used directly in manufacturing a product.

Direct Materials

Materials that are directly used in the manufacture of end products.

Direct Labor

Wages paid to employees who are directly involved in the production of goods or services.

Factory Overhead

All indirect costs associated with manufacturing, excluding direct labor and direct materials.