In Calculating Cash Flows from Operating Activities Using the Indirect

question 2

Multiple Choice

In calculating cash flows from operating activities using the indirect method, a gain on the sale of equipment is

• A) added to net income
• B) deducted from net income
• C) ignored because it does not affect cash
• D) reported supplementally as a noncash investing and financing activity

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Definitions:

Testis

A male reproductive organ that produces sperm and hormones, including testosterone.

Mammary Glands

Specialized organs in mammals that produce milk to feed young offspring, predominant in female mammals.

Modified Sweat Glands

Specialized sweat glands such as mammary glands which serve additional functions beyond thermoregulation, including the secretion of milk.

Sebaceous Glands

Small oil-producing glands present in the skin of mammals, secreting sebum to lubricate skin and hair.