A loss on the sale of machinery in the ordinary course of business should be presented in a statement of cash flows (indirect method) as
A) a deduction from net income.
B) an addition to net income.
C) an inflow and outflow of cash.
D) an outflow of cash.

Question

Quizplus · Accepted Answer

In the indirect method of the statement of cash flows, a loss on the sale of machinery is added back to net income because it is a non-cash expense that reduced net income but did not affect cash flow.

A Loss on the Sale of Machinery in the Ordinary