A loss on the sale of machinery should be reported in the statement of cash flows as:
A) An adjustment to net income under the indirect method.
B) An operating activity under the direct method.
C) An investing activity cash outflow.
D) A noncash investing activity.

Question

Quizplus · Accepted Answer

The loss on the sale of machinery is added back to net income when preparing the statement of cash flows using the indirect method because it is a non-cash expense that reduced net income but did not involve an outflow of cash.

A Loss on the Sale of Machinery Should Be Reported