A loss on the sale of machinery in the ordinary course of business should be presented in a Statement of Cash Flows as a(n):
A) Adjustment to net income in the reconciliation of net income to cash from operating activities.
B) Inflow from operating activities.
C) Inflow from investing activities.
D) Outflow from investing activities.

Question

Quizplus · Accepted Answer

A loss on the sale of machinery in the ordinary course of business is added back to net income in the reconciliation of net income to net cash provided by operating activities because it does not involve cash outflow itself; rather, it affects net income without affecting cash flows directly.

A Loss on the Sale of Machinery in the Ordinary