Martin Company Is Preparing Its Statement of Cash Flows Using

question 124

Multiple Choice

Martin Company is preparing its statement of cash flows using the indirect method. During the year, they sold equipment for $5,990 cash. The net book value of the asset prior to sale was $5,550. Which of the following statements is true?

• A)The gain on sale of $440 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 $5,990 would be shown as a positive cash flow in the investing activities section.
• D)The gain on sale of $440 would be shown as a positive cash flow in the financing activities section.

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Definitions:

Self-Mutilation

The act of deliberately injuring one's own body without suicidal intent, typically as a way of coping with distress.

Ethical Principle

A fundamental guideline that dictates the conduct of individuals and organizations by delineating what is right and wrong.

Justice

The principle of fairness and the moral rightness of actions and laws within society.

False Imprisonment

The act of detaining a person without legal authority, infringing on their freedom of movement.