Using the direct method of preparing the statement of cash flows,to determine the cash effects of operating activities,a gain on the sale of equipment would be
A)Added to operating expenses
B)Deducted from payments for operating expenses
C)Deducted from sales revenue
D)Ignored because a gain is not a part of sales or operating expenses

Question

Quizplus · Accepted Answer

A gain on the sale of equipment is not a part of sales or operating expenses, so it is ignored when using the direct method to prepare the statement of cash flows.

Using the Direct Method of Preparing the Statement of Cash