A loss on the disposal of a long-term asset:
A) Involves cash inflows.
B) Involves cash outflows.
C) Does not reflect any cash flow.
D) Is the result of an investing activity.
E) Does not reflect any cash flow and is the result of an investing activity.

Question

Quizplus · Accepted Answer

A loss on the disposal of a long-term asset does not directly involve cash flow; it is an accounting entry reflecting the difference between the asset's book value and its sale price. It is related to investing activities as it involves the sale of a long-term asset.

A Loss on the Disposal of a Long-Term Asset