In a statement of cash flows prepared by the indirect method, which of the following events would be added to net income?
A) the sale of a company automobile at a gain.
B) income in excess of dividends received from an equity-method investment
C) proceeds from the sale of an available-for-sale investment
D) loss on the sale of plant assets

Question

Quizplus · Accepted Answer

In the indirect method of preparing a statement of cash flows, non-cash expenses such as depreciation and losses on the sale of assets are added back to net income. A loss on the sale of plant assets is a non-cash expense that reduced net income but did not involve an outflow of cash, so it is added back to net income to adjust for the cash flow.

In a Statement of Cash Flows Prepared by the Indirect