How should a gain on the sale of equipment be reflected in the operating section of the cash flow statement when using the indirect method?
A)As a deduction from net income
B)As a cash inflow
C)As an addition to net income
D)It is not reflected in the operating section.

Question

Quizplus · Accepted Answer

Gains on the sale of equipment are deducted from net income in the operating section of the cash flow statement when using the indirect method. This is because the gain is considered a non-cash item that increased reported net income, but did not result in an actual cash inflow from operating activities.

How Should a Gain on the Sale of Equipment Be