Under the Indirect Method,a Loss Resulting from the Sale of Equipment

question 202

Multiple Choice

Under the indirect method,a loss resulting from the sale of equipment would:

• A) be subtracted from net income in the operating activities section
• B) be added to net income in the operating activities section
• C) appear in the financing activities section
• D) appear in the schedule of noncash investing and financing activities

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Definitions:

Period Costs

Expenses directly tied to a specific time period, such as rent, utilities, and administrative salaries, and not directly to the production process.

Units Sold

The number of individual items that have been sold over a specified period.

Period Costs

Costs that are not directly related to the manufacturing process and are charged as expenses in the period they arise.

Units Sold

The total quantity of a company's product that was sold during a specified period.