Hubble Corporation, Which Uses the Indirect Method to Prepare Its

question 50

Multiple Choice

Hubble Corporation, which uses the indirect method to prepare its statement of cash flows, sold used equipment for cash. Which statement regarding this sale is TRUE?

• A)The cash from operating activities will be greater if the direct method is used to prepare the statement of cash flows.
• B)The effect on cash from operating activities depends on whether there was a gain or loss on sale.
• C)The cash from operating activities will be less if the direct, rather than indirect, method is used to prepare the statement of cash flows.
• D)The cash from operating activities will not be reported if the indirect method is used to prepare the statement of cash flows.

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Definitions:

Fishing Tackle

Equipment and accessories used for angling or fishing, including rods, lines, hooks, lures, and floats.

Proposed Price

The initial price suggested by a seller or contractor before any negotiations or adjustments.

Contract

An agreement between parties creating mutual obligations enforceable by law.

Financing

The act of providing funds for business activities, making purchases, or investing.