A Company Uses the Indirect Method to Prepare the Statement

question 115

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows. How will a gain from the sale of equipment be presented on the statement?

• A)A gain from the sale of equipment will be an addition in the investing activities section.
• B)A gain from the sale of equipment will be added to net income in the operating activities section.
• C)A gain from the sale of equipment will be a deduction in the financing activities section.
• D)A gain from the sale of equipment will be deducted from net income in the operating activities section.

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Definitions:

Interest Rates

The expense associated with acquiring a loan, usually represented as a proportion of the sum lent.

Better Off

A condition in which an individual or group's situation improves in terms of economic welfare, happiness, or other measures of well-being.

Present Value

The current value of a future sum of money or stream of cash flows, given a specified rate of return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed on an annual basis.