In calculating cash ﬂows from operating activities using the indirect method, a loss on the sale of equipment is
A) added to net earnings.
B) deducted from net earnings.
C) ignored because it does not affect cash.
D) not reported on a cash ﬂow statement.

Question

Quizplus · Accepted Answer

A loss on the sale of equipment is added back to net earnings when using the indirect method to calculate cash flows from operating activities. This is because the loss is a non-cash expense that reduced net income, but did not actually result in a cash outflow.

In Calculating Cash ﬂOws from Operating Activities Using the Indirect