In Calculating Cash Flows from Operating Activities Using the Indirect

question 2

Multiple Choice

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

---

Definitions:

Schachter (1959)

Refers to the study by Stanley Schachter which explored the phenomenon of social affiliation under conditions of anxiety.

Misery Loves Company

A saying that suggests people who are unhappy may get some consolation from knowing others are unhappy too.

Fight-Or-Flight Theory

A physiological theory that explains how animals and humans respond to threat or danger with a primary physiological reaction to either fight or flee.

Tend-And-Befriend Theory

A stress response theory proposing that, under stress, individuals (particularly women) are predisposed to nurturing activities and seeking social support.