When a Fixed Asset Is Sold for Other Than Its

question 83

Multiple Choice

When a fixed asset is sold for other than its book value,which one of the following incorrectly states the effect of this transaction on a company's statement of cash flows?

• A)Under the direct method,no gain or loss from the sale of fixed assets is included in the operating activities section.
• B)Under the indirect method,gains from the sale of fixed assets are subtracted from net income in the operating activities section.
• C)Under the indirect method,losses from the sale of fixed assets are added back to net income to arrive at net cash from operations.
• D)Losses and gains from the sale of fixed assets are operating items to be listed in the operating activities section under both the direct and indirect methods.
• E)Under both the direct and indirect methods,the sale of a fixed asset would affect the investing activities section.

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Definitions:

Peer Relationships

Social connections among individuals of approximately the same age, which are important for social development.

Avoidance

A defensive mechanism where an individual steers clear of certain thoughts, feelings, or interactions due to perceived negative outcomes.

Centration

A term from Piaget's theory of cognitive development, describing the tendency to focus on one aspect of a situation while neglecting others.

Decentering

The cognitive ability to consider multiple aspects of a situation rather than focusing on a single perspective.