When using the indirect method, a loss on the sale of equipment should be added to profit to derive cash flows from operating activities.

Name: When using the indirect method, a loss on the sale of equipment should be added to profit to derive cash flows from operating activities.
Brand: Quizplus
Rating: 4.9 (45 reviews)

Question

Quizplus · Accepted Answer

A loss on the sale of equipment is a non-cash expense that reduces net income, so it is added back to net income in the operating activities section of the cash flow statement when using the indirect method.

When Using the Indirect Method, a Loss on the Sale