A Company Uses the Indirect Method to Prepare the Statement

question 124

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows, how will a gain from the sale of equipment be presented on the statement of cash flows?

• A)A gain from the sale of equipment will be added to net income in the operating activities section on the statement of cash flows.
• B)A gain from the sale of equipment will be an addition in the financing activities section on the statement of cash flows.
• C)A gain from the sale of equipment will be deducted from net income in the operating activities section on the statement of cash flows.
• D)A gain from the sale of equipment will be an addition in the investing activities section on the statement of cash flows.

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Definitions:

Demand Uncertainty

The unpredictability of customer demand, making it difficult for businesses to accurately forecast sales.

Price Uncertainty

Refers to the fluctuation in the prices of goods or services in a market, which can be due to various factors including demand, supply, and external economic conditions.

Warehousing Space

The area allocated for the storage of goods in a building or designated area until they are ready to be shipped or sold.

Enrollment

The process of registering or entering into a membership, course, or program.