A gain on the sale of a fixed asset is reported on the statement of cash flows ________.
A) as a deduction to net income under operating activities for the indirect method
B) as a deduction to the cash proceeds received from the sale of fixed assets under investing activities
C) as a noncash transaction
D) as a cash inflow under financing activities

Question

Quizplus · Accepted Answer

Gains on the sale of fixed assets are added back to net income in the operating activities section when preparing the statement of cash flows using the indirect method. This is because the gain is included in the net income figure but does not involve an actual cash inflow from operating activities.

A Gain on the Sale of a Fixed Asset Is