When preparing the operating activities section of the statement of cash flows using the indirect method, nonoperating gains are added to income.

Question

Quizplus · Accepted Answer

Nonoperating gains are not part of operating activities, and therefore should not be added to income when preparing the operating activities section of the statement of cash flows using the indirect method. Nonoperating gains should be reported separately in the investing or financing activities section, depending on the nature of the gain.

When Preparing the Operating Activities Section of the Statement of Cash