In calculating cash flows from operating activities using the indirect method a gain on the sale of equipment is
A) added to net income.
B) deducted from net income.
C) ignored because it does not affect cash.
D) not reported on a statement of cash flows.

Question

Quizplus · Accepted Answer

A gain on the sale of equipment is a non-cash item and would be added back to net income when using the indirect method. Therefore, it would be deducted from net income in order to arrive at the cash flows from operating activities.

In Calculating Cash Flows from Operating Activities Using the Indirect