Question

Using the indirect method (statement of cash flows), a gain from the sale of equipment would: A) be subtracted from net income B) be added to net income C) have no adjustment made to net income D) be added to the investing section of the statement of cash flows

Answer 1

Answer:

The correct answer is A) be subtracted from net income

Explanation:

The indirect method involves the adjustment of net income with changes in balance sheet accounts to arrive at the amount of cash generated by operating activities.

It depends on the account if it is added or subtracted to net income.

A gain from the sale of equipment is subtracted from net income