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.

---

Definitions:

Critical Thinking Skills

The ability to actively analyze, interpret, and evaluate information and arguments in a reflective and logical manner.

Innovative Suggestions

Novel or inventive ideas proposed to solve problems or improve a situation.

Holistic Critical Thinking

An approach to critical thinking that considers all possible factors, including context, emotional, and logical aspects.

Scoring Rubric

A set of criteria and standards typically used to evaluate or grade assignments or performances systematically.