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:

Connective

A word or phrase in logic that connects propositions in such a way that the truth or falsehood of the compound proposition depends on the truth or falsehood of the components.

Inconsistent

Lacking compatibility or uniformity in actions, values, methods, measures, principles, or expectations; in logic, having two or more propositions that cannot all be true at the same time.

Contradictory

In direct opposition to something else, containing elements or statements that are in logical conflict with one another.

Symbolic Form

A representation of an idea or concept through symbols or a symbolic system.