If a Company Uses the Indirect Method to Determine Net

question 69

Multiple Choice

If a company uses the indirect method to determine net cash flows from operating activities:

• A)gains on the disposal of equipment must be added to net income and losses subtracted from net income.
• B)gains on the disposal of equipment must be added to net income but losses are adjusted against the original asset account.
• C)gains on the disposal of equipment must be subtracted from net income and losses added to net income.
• D)there is no entry for a gain or loss on the disposal of equipment as this is only an Investing activity.

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Definitions:

Filtrate

The liquid that has passed through a filter, removing certain particles or substances.

ADH

Antidiuretic hormone, also known as vasopressin, a hormone produced by the hypothalamus and released by the posterior pituitary gland, which helps control the balance of water in the body.

Collecting Duct

Part of the renal tubule system in the kidney that is responsible for the concentration and transport of urine.

Filtrate

The fluid that has passed through a filter, removing certain particles and solutes, commonly used in the context of biological processes like kidney filtration.