A Corporation Uses the Indirect Method for Preparing the Statement

question 7

Multiple Choice

A corporation uses the indirect method for preparing the statement of cash flows. A fixed asset has been sold for $25,000 representing a gain of $4,500. The value in the operating activities section regarding this event would be

• A) $25,000
• B) $(4,500)
• C) $29,500
• D) $4,500

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Definitions:

Net Income

Refers to the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Dividends

Dividends are the portion of profit a company decides to distribute to its shareholders, often on a regular basis.

Equity

The value of an asset after deducting the cost of liabilities, representing the owner's interest in a company.

Investing Activities

Investing activities are financial transactions related to the acquisition or disposal of long-term assets and other investments not considered cash equivalents, as detailed in the statement of cash flows.