When Preparing the Statement of Cash Flows Using the Indirect

question 14

Multiple Choice

When preparing the statement of cash flows using the indirect method, which statement is NOT true?

• A)Depreciation expense is added to net income.
• B)Gains on the sale of long-term assets are subtracted from net income.
• C)Losses on the sale of long-term assets are subtracted from net income.
• D)Increases in current liabilities are added to net income.

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Definitions:

Intangible Property

Assets that cannot be physically touched, such as intellectual property, brand recognition, and copyrights.

Ranch

A large farm, especially in the Western US, where cattle, horses, or other livestock are raised.

Tangible Personal Property

Items of property that can be physically touched and moved, such as furniture, vehicles, and electronics.

Vacant Sale

The sale of a property that is empty or not currently occupied by tenants or owners.