The Sonesta Company Uses the Indirect Method for the Statement

question 14

Multiple Choice

The Sonesta Company uses the indirect method for the statement of cash flows. In 2013, they sold equipment for $4,800 cash. The net book value of the asset prior to sale was $4,000. Which of the following statements is true?

• A) The gain on sale of $800 would be added back to net income in the operating activities section.
• B) The book value of the assets sold would be shown as a negative cash flow in the investing activities section.
• C) The cash receipt of $4,800 would be shown as a positive cash flow in the investing activities section.
• D) The gain on sale of $800 would be shown as a positive cash flow in the financing activities section.

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Definitions:

Birds of Passage

Immigrants who moved to America during the late 19th and early 20th centuries intending to work and eventually return to their home countries.

Temporarily

For a limited time period; not permanent.

Progressives

Individuals or a movement advocating for reform and improvements in societal issues like social welfare, workers' rights, and reducing corruption, prominent in the late 19th and early 20th centuries.

Liberty

Living in a community without the burden of authoritarian impositions on one's way of living, actions, or political ideologies.