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24 Sep 2018
14-5 If an asset is sold at a gain, why is the gain subtracted from net income when computing the net cash provided by operating activities under the indirect method?
14-5 If an asset is sold at a gain, why is the gain subtracted from net income when computing the net cash provided by operating activities under the indirect method?
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Nestor RutherfordLv2
27 Sep 2018
Related questions
Highlight your answers. | ||||||||||||
1. The indirect method is used to develop Which section of the cash flow statement? | ||||||||||||
a. | Operating | |||||||||||
b. | Investing | |||||||||||
c. | Financing | |||||||||||
d. | All of them. | |||||||||||
2. How is "depreciation expense" treated in developing cash flow statement using the indirect method? | ||||||||||||
a. Add to net income in calculating cash flow from operating activities | ||||||||||||
b. Subtracted from net income in calculating cash flow from operating activities | ||||||||||||
c. It is part of investing activities as it is related to PPE | ||||||||||||
d. It is not considered as it is not a cash activity | ||||||||||||
3. How is "increase in inventory" treated in developing cash flow statement using the indirect method? | ||||||||||||
a. Add to net income in calculating cash flow from operating activities | ||||||||||||
b. Subtracted from net income in calculating cash flow from operating activities | ||||||||||||
c. It depends | ||||||||||||
d. It is part of investing activities | ||||||||||||
4. How is "loss in selling machinery" treated in developing cash flow statement using the indirect method? | ||||||||||||
a. Add to net income in calculating cash flow from operating activities | ||||||||||||
b. Subtracted from net income in calculating cash flow from operating activities | ||||||||||||
c. It is part of investing activities as it is related to PPE | ||||||||||||
d. we need to know the selling price of the machinery to decide. | ||||||||||||
5. How is "decrease in investment" treated in developing cash flow statement using the indirect method? | ||||||||||||
a. Add to net income in calculating cash flow from operating activities | ||||||||||||
b. Subtracted from net income in calculating cash flow from operating activities | ||||||||||||
c. It is part of investing activities | ||||||||||||
d. It depends on whether it's long-term or short-term investment. |