If a Company Uses the Indirect Method to Determine Net

Multiple Choice

If a company uses the indirect method to determine net cash flows from operating activities:

A) gains on the disposal of equipment must be added to net income and losses subtracted from net income.
B) gains on the disposal of equipment must be added to net income but losses are adjusted against the original asset account.
C) gains on the disposal of equipment must be subtracted from net income and losses added to net income.
D) there is no entry for a gain or loss on the disposal of equipment as this is only an Investing activity.