Assume the Direct Method Is Used to Compute Net Cash

question 12

Multiple Choice

Assume the direct method is used to compute net cash flows from operating activities.For this item extracted from the financial statements-Gain on Sale of Investment-indicate the effect on cash flows from operating activities by choosing one of the following:

• A)Gain on sale is added to other cash flows to arrive at net cash from operating activities.
• B)Gain on sale is subtracted from other cash flows to arrive at net cash from operating activities.
• C)Gain on sale is not used to arrive at net cash from operating activities.

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Definitions:

USS Monitor

A significant ironclad warship of the Union during the American Civil War, renowned for its pivotal role in the Battle of Hampton Roads in 1862, marking a revolution in naval warfare.

CSS Virginia

A historic ironclad warship of the Confederate States Navy in the American Civil War, notably partaking in the Battle of Hampton Roads in 1862.

American Red Cross

A humanitarian organization that provides emergency assistance, disaster relief, and education inside the United States, founded by Clara Barton in 1881.

U.S. Sanitary Commission

A private relief agency founded in 1861 to support sick and wounded soldiers of the U.S. Army during the American Civil War, precursor to modern Red Cross activities.