When a Company Uses the Indirect Method to Present the Statement

question 68

True/False

When a company uses the indirect method to present the statement of cash flows,a gain on the sale of a long-term asset must be subtracted from net income to reconcile to net cash provided by operating activities.

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Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, determined by physical counts or accounting methods.

LIFO

Stands for Last In, First Out, an inventory valuation method where the most recently produced or purchased items are recorded as sold first.

Periodic Inventory System

An inventory accounting system where inventory counts are performed and updated at specific intervals to determine cost of goods sold and ending inventory levels.

Ending Inventory

The value of goods available for sale at the end of an accounting period. It is the beginning inventory plus purchases minus the cost of goods sold.