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:

Uncertain World

A situation or environment where outcomes cannot be predicted with complete confidence due to various unpredictable factors.

Economic Profit

The divergence between complete income and total liabilities, considering both concrete and theoretical expenses.

Economic Losses

The decrease in financial value or resources typically due to business activities or adverse economic conditions.

Human Capital

The collective skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.