When Preparing the Statement of Cash Flows Using the Indirect

question 43

True/False

When preparing the statement of cash flows using the indirect method,a loss on the sale of plant assets must be shown as a subtraction from the investing activities section.

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Definitions:

Gross Method

A method of recording purchases of inventory at their gross price without any deduction for trade discounts at the time of purchase.

Periodic Inventory Method

An accounting approach where inventory values and cost of goods sold are determined at the end of an accounting period through physical inventory counts.

Purchases Discount

A reduction in the invoice price of goods, granted by the seller to the buyer for early payment within a specified time frame.

Gross Method

An accounting method for recording inventory purchases without deducting discounts at the time of purchase.