In the indirect method, a gain on sale of equipment is reported as:
A) an increase to cash provided by investing activities.
B) a decrease to net earnings.
C) an increase to revenues.
D) a decrease to equipment purchases.

Question

Quizplus · Accepted Answer

In the indirect method of the cash flow statement, a gain on sale of equipment is subtracted from net earnings in the operating activities section because it is a non-cash item that was included in net income.

In the Indirect Method, a Gain on Sale of Equipment