Under the indirect method,a loss resulting from the sale of equipment would:
A) be subtracted from net income in the operating activities section
B) be added to net income in the operating activities section
C) appear in the financing activities section
D) appear in the schedule of noncash investing and financing activities

Question

Quizplus · Accepted Answer

Under the indirect method, a loss from the sale of equipment is added back to net income in the operating activities section because it is a non-cash expense that reduced net income on the income statement, but did not involve an outflow of cash in the operating activities.

Under the Indirect Method,a Loss Resulting from the Sale of Equipment