A Company Uses the Indirect Method to Prepare the Statement

question 30

Multiple Choice

A company uses the indirect method to prepare the statement of cash flows.How will a loss from the sale of equipment be presented on the statement?

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

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Definitions:

Disconfirmed

Disconfirmed means proven to be false or invalid, especially in the context of theories, hypotheses, or beliefs.

Confirmed

Verified or established as true or accurate.

Circumstances

The specific conditions or facts affecting a situation, event, or action that can influence its outcome or the behavior of individuals involved.

Construct Validity

The extent to which a test measures what it claims, or is purported, to be measuring.