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

question 73

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:

Invoice

A document issued by a seller to a buyer, indicating the products or services provided and the amount due.

Accrued Wages

Compensation that employees have acquired through work but still awaits disbursement by the employer.

Wages Expense

The total cost incurred by a company for the compensation of its employees, excluding benefits and bonuses.

Wages Payable

A liability account that records the amounts owed to employees for work that has been performed but not yet paid.