A Gain on the Sale of a Fixed Asset Is

question 161

Multiple Choice

A gain on the sale of a fixed asset is reported on the statement of cash flows:

• A) as an adjustment to operating activities under the direct method
• B) as an adjustment to operating activities under the indirect method
• C) as an adjustment to operating activities, regardless of the method used
• D) None of these answers is correct.

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Definitions:

Manufactured Quantity

Manufactured quantity refers to the total number of units produced by a company during a specified period.

Absorption Costing

A financial recording technique that encompasses all production expenses, such as raw materials, direct labor, and variable as well as fixed overheads, into the pricing of a product.

Operating Income

Profit generated from core business operations, excluding expenses such as taxes and interest.

Absorption Costing

A bookkeeping approach that incorporates all expenses related to production, including direct materials, direct workforce, and variable along with fixed overhead costs, into the product's cost.