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

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Definitions:

Wisdom of the Crowd

The phenomenon that collective judgment or decision of a diverse group of individuals is often more accurate than that of any single member of the group.

Ringelmann Effect

The phenomenon where individual productivity decreases as the size of a group increases, often due to coordination and motivation issues.

Anonymity

The state of being anonymous, where an individual's identity is not known or revealed.

Social Facilitation

The tendency for people to perform differently when in the presence of others than when alone, typically improving on simple tasks and performing poorly on complex tasks.