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:

Contract Remedies

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A legal doctrine which releases both parties from their contractual obligations due to unexpected events that render the contract impossible to fulfill.

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