Using the Indirect Method

question 76

Multiple Choice

Using the Indirect Method
For the following question(s) , indicate how each transaction described would be classified on a statement of cash flows if the operating activities section is prepared under the indirect method.
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When using the indirect method, where is the gain from selling a long-term investment appear on the statement of cash flows? (The proceeds from selling the investment are considered separately.)

• A) Operating activity
• B) Investing activity
• C) Financing activity
• D) Financing and Investing activities

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Definitions:

Mortgagee

The lender or financial institution in a mortgage agreement, holding the mortgage as security for the loan.

Debtor

An individual or entity that owes a debt to another party, often in the context of financial obligations.

Real Estate

Assets that include land, the structures on that land, as well as the natural resources present.

Deeds

Legal documents that transfer ownership of real estate from one party to another and include information like the legal description of the property and the names of the buyer and seller.