Asked by Shaylie Pickrell on Jun 14, 2024
Verified
On the statement of cash flows prepared using the indirect method, a $7,500 gain on the sale of fixed assets would be
A) added to net income in converting the net income reported on the income statement to cash flows from operating activities
B) deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
C) added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
D) deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
Net Income
The final amount a company earns after removing all outgoings and tax liabilities from its total income.
Indirect Method
A way of preparing a cash flow statement where net income is adjusted for changes in balance sheet accounts to reflect cash transactions.
Sale Of Fixed Assets
The process of selling long-term assets such as property, plant, and equipment for cash or other compensation.
- Acquire knowledge of the indirect technique for ascertaining net cash flow from operating activities, taking into account adjustments to net income.
Verified Answer
Learning Objectives
- Acquire knowledge of the indirect technique for ascertaining net cash flow from operating activities, taking into account adjustments to net income.
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