Multiple Choice
Which statements represent a company's primary means of communicating information to external users?
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1. Introduction to Accounting
The Financial Statements
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The direct materials required to manufacture each unit of product are listed on a _________.
A
bill of materials
B
statement of cash flows
C
balance sheet
D
income statement
Verified step by step guidance1
Understand the concept of direct materials: Direct materials are the raw materials that are directly used in the production of a product.
Learn about the bill of materials: A bill of materials (BOM) is a detailed list that specifies the raw materials, components, and quantities required to manufacture a product.
Differentiate between the options provided: The statement of cash flows, balance sheet, and income statement are financial reports that summarize financial activities, not production requirements.
Recognize that the bill of materials is specifically used in manufacturing to outline the materials needed for production, making it the correct answer.
Conclude that the direct materials required to manufacture each unit of product are listed on a bill of materials.
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