In Calculating Cash Flows from Operating Activities Using the Indirect

question 76

Multiple Choice

In calculating cash flows from operating activities using the indirect method, a loss on the sale of equipment is

• A) not reported on a cash flow statement.
• B) added to net earnings.
• C) ignored because it does not affect cash.
• D) deducted from net earnings.

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Definitions:

Vernier Calipers

A precision measuring instrument used to measure internal and external dimensions extremely accurately.

Dial Calipers

Precision measuring tools that use a calibrated dial to measure distances or thicknesses with high accuracy.

Rotors

Discs attached to the wheels of a vehicle that the brake pads press against to slow or stop the car, as part of the disc brake system.

Hub

The central part of a wheel that connects it to the axle, bearing the load and allowing it to rotate.