A gain on sale of capital assets is added to net income when preparing the operating activities section of a statement of cash flows under the indirect method.

Question

Quizplus · Accepted Answer

In the operating activities section of the statement of cash flows under the indirect method, a gain on the sale of capital assets is subtracted from net income to adjust for the fact that it is a non-cash item that had increased net income.

A Gain on Sale of Capital Assets Is Added to Net