A loss on the sale of long-term assets is added to net income to arrive at net cash flows from operating activities under the indirect method.

Name: A loss on the sale of long-term assets is added to net income to arrive at net cash flows from operating activities under the indirect method.
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Question

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In the indirect method, a loss on the sale of long-term assets is added back to net income because it is a non-cash expense that reduced net income but did not affect cash flow from operating activities.

A Loss on the Sale of Long-Term Assets Is Added