Kevin Woodworking Company Is Preparing Its Statement of Cash Flows

question 58

Multiple Choice

Kevin Woodworking Company is preparing its statement of cash flows using the indirect method.During the year,Kevin sold equipment for $7,490 cash.The net book value of the asset was $4,670.Which of the following statements is true?

• A)The gain on sale of $2,820 is added back to net income in the operating activities section.
• B)The book value of the assets sold is shown as a negative cash flow in the investing activities section.
• C)The cash receipt of $7,490 is shown as a positive cash flow in the investing activities section.
• D)The gain on sale of $2,820 is shown as a positive cash flow in the financing activities section.

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Definitions:

Diffusion of Responsibility

The phenomenon where individuals feel diminished responsibility for their actions because others are seen as equally responsible.

Agreeableness

A personality trait characterized by warmth, kindness, and a willingness to cooperate and get along with others.

Diffusion of Responsibility

A psychological phenomenon in which individuals in a group are less likely to take action or feel responsible because the presence of others is seen to dilute personal responsibility.

Just World Hypothesis

The belief that the world is fundamentally fair, leading people to rationalize an undeserved, bad outcome as deserved.