Gannon Corporation Uses the Indirect Method to Prepare Its Statement

question 4

Multiple Choice

Gannon Corporation uses the indirect method to prepare its statement of cash flows.Following this approach,a gain on sale of equipment was deducted from net income in computing net cash flow from operating activities.The most likely reason for this adjustment is that:

• A)The sale of equipment did not result in the receipt of any cash by Gannon Corporation.
• B)The sale resulted in a cash receipt in an accounting period different from the period in which the gain was recognized.
• C)The amount of the gain recognized was not equal to the cash received.
• D)This type of transaction is not classified as an operating activity.

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Definitions:

Foreign Companies

Companies that are incorporated in one country but operate, have offices, or conduct significant business activities in other countries.

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation (stock), a creditor relationship with a governmental body or a corporation (bond), or rights to ownership as represented by an option.

Sustainable Business Practice

This refers to business strategies and activities that consider the long-term impact on the environment, society, and the economy, aiming to meet the needs of the present without compromising the ability of future generations to meet their own needs.

Responsible Packaging

The development and use of packaging solutions that minimize environmental impact, focusing on sustainability, recyclability, and the reduction of waste.