Asked by
David Trevino
on Nov 13, 2024
Verified
In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is
A) added to net income
B) deducted from net income
C) ignored because it does not affect cash
D) reported supplementally as a noncash investing and financing activity
Gain on Sale
Gain on sale refers to the profit made from selling an asset for more than its book value.
Indirect Method
A method for creating the cash flow statement by modifying net income according to non-cash activities and fluctuations in working capital.
Operating Activities
Activities directly related to the principal revenue-producing activities of an entity, detailed in the cash flow statement.
- Acquire understanding of the indirect approach in determining net cash flow from operations.
- Comprehend the influence of non-operating elements, such as gains or losses, on determining net cash flow.
Verified Answer
NB
Learning Objectives
- Acquire understanding of the indirect approach in determining net cash flow from operations.
- Comprehend the influence of non-operating elements, such as gains or losses, on determining net cash flow.