A Loss on the Sale of Machinery in the Ordinary

question 29

Multiple Choice

A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows prepared under the indirect method as a(n)

• A) inflow from operating activities.
• B) inflow from investing activities.
• C) adjustment to reconcile net income to cash from operating activities.
• D) outflow from investing activities.

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Definitions:

Accounts Receivable

Money owed to a business by its customers for goods or services that have been delivered or used but not yet paid for.

Capital Gains

The profit earned from the sale of an asset, such as stocks or real estate, where the selling price exceeds the original purchase price.

Marginal Tax Rates

The rate at which the next dollar of taxable income will be taxed, according to the income tax brackets set by the government.

Capital Gains

The profit from the sale of an asset or investment, which is the difference between the sale price and the purchase price.