In Calculating Cash Flows Provided (Used) by Operating Activities Using

question 65

Multiple Choice

In calculating cash flows provided (used) by 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)not reported on a statement of cash flows.

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Definitions:

Salary Allowances

Fixed amounts paid to employees in addition to their regular salary to cover specific needs or expenses, such as travel or living expenses.

Withdrawal

The act of removing funds from a bank account or the process of taking assets out of a business by its owner for personal use.

Partnership Assets

Assets owned by a partnership that are used for carrying out its business activities.

Capital Balances

The amount of money that partners or owners have invested in a business, which may change over time with the addition of profits or the deduction of losses and withdrawals.