For each transaction provided in items , select the proper section of the statement of cash flows in which it should be reported using the indirect method from the reporting categories provided in a through h below.If the item is not required to be reported on the statement of cash flows, place an 'X' in the space provided.
-Recognized loss on the sale of equipment
A) Cash flows from operating activities-will be added to net income
B) Cash flows from operating activities-will be subtracted from net income
C) Cash flows from investing activities-increase as a result of cash inflows
D) Cash flows from investing activities-decrease as a result of cash outflows
E) Cash flows from financing activities-increase as a result of cash inflows
F) Cash flows from financing activities-decrease as a result of cash outflows
G) Disclosed as a non-cash transaction in the notes
H) Appears in operating activities only under the direct method

Question

Quizplus · Accepted Answer

CA recognized loss on the sale of equipment is added back to net income in the operating activities section when using the indirect method because it does not involve cash outflow for operating activities. The actual cash received from the sale of equipment is reported in the investing activities section as it involves the disposal of a long-term asset, which results in cash inflow.

For Each Transaction Provided in Items , Select the Proper