When a company uses the indirect method to present the statement of cash flows, a gain on the sale of a long-term asset must be added to net income to reconcile to net cash provided by operating activities.

Question

Quizplus · Accepted Answer

When using the indirect method, a gain on the sale of a long-term asset is subtracted from net income to reconcile to net cash provided by operating activities because the gain is included in the net income calculation but does not affect cash.

When a Company Uses the Indirect Method to Present the Statement