In calculating cash flows provided (used) by operating activities using the indirect method, a loss on the sale of equipment will appear as a(n)
A)subtraction from net income.
B)addition to net income.
C)addition to cash flow from investing activities.
D)subtraction from cash flow from investing activities.

Question

Quizplus · Accepted Answer

A loss on the sale of equipment is added back to net income when using the indirect method to calculate cash flows from operating activities, because it is a non-cash expense that reduced net income but did not affect cash.

In Calculating Cash Flows Provided (Used) by Operating Activities Using