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 is
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 cash flow.

Question

Quizplus · Accepted Answer

A gain on the sale of equipment is a noncash item and is therefore not included in the cash flow from operating activities.

Using the Direct Method of Preparing the Statement of Cash