Under the indirect method of parenting the statement of cash flows a gain on the sale of equiipment is -added to the net income in the operating activities section -ignored since this transaction does not affect cash -subtracted from net income in the operating activities section -subtracted from the book e of the equipment in the financing activities section

Any gain or loss from the sale of equipment is reported in the operating activities section of the statement of cash flows. True False

The following schedule relates the income statement with cash flows from operating activities, derived by both the direct and indirect methods. Some elements necessary to complete the schedule are missing. Required: Complete the schedule by determining each of the following missing elements: (Amounts to be deducted should be indicated with a minus sign.) Income Statement Sales Gain on sale of equipment Cost of goods sold Salaries expense Depreciation expense Interest expense Insurance expense Loss on sale of land Income tax expense Net Income Cash flows from Operating Activities Indirect Method Net income Adjustments: $432 Decrease in accounts receivable 36 Gain on sale of equipment Increase in inventory Increase in accounts payable (66) (21) Depreciation expense Decrease in bond discount (45) Decrease in prepaid insurance (18) Loss on sale of land (51) Increase in income tax payable Net cash flows from operating activities Direct Method 18 Cash received from customers (36) (Not…

When calculating the cash flows from operating activities which of thefollowing statements is true?a) The tax paid should be deductedb) The interest payable should be deductedc) The tax paid should be addedd) None of the above

Use the following income statement and information about selected current assets and current liabilities to calculate the net cash provided or used by operating activities under the indirect method. Income Statement For Year Ended December 31, Year 2 Sales Cost of goods sold Gross profit Operating expenses Wages expense Depreciation expense Rent expense Interest expense Loss on sale of land Net income $ 26,500 8,500 8,700 3,400 Accounts receivable Inventory Prepaid rent Accounts payable Wages payable Interest payable Selected beginning and ending balances of current asset and current liability accounts, all of which relate to operating activities, follow. $ 225,000 111,500 $ 113,500 $ 30,600 25,300 850 47,100 $ 66,400 5,000 $ 61,400 Balance December 31, December 31, Year 2 Year 1 $ 25,500 21,500 550 27,500 10,500 400 30,100 13,400 600

In the operating activities portion of the statement of cash flows when utilizing the indirect method, explain why depreciation expenditure, depletion expense, and amortization expense are added to net income in the operating activities section of the statement of cash flows.

Items that are added back to net income in determining cash provided by operating activities under the indirect method, do not include: Group of answer choices an increase in inventory loss on sale of equipment depreciation expense an increase in accounts payable