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1. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
a. dividends declared and paid
b. a loss on the sale of equipment
c. depreciation expense
d. gain on sale of land
2. On the statment of cash flows a $7,500 gain on the sale of fixed assets would be
a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities
b. added to dividends declared in converting the dividend declared to the cash flows from financing activities related to dividends
c. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends
d. added to net income in converting the net income reported on the income statement to cash flows from operating activities
3. on the statement of cash flows, the cash flows from financing activites section would include all of the following except
a. receipts from the sale of bonds payable
b. payments of interest on bonds payable
c. payments for purchase of treasury stock
d. payments for dividends
Expert Answer
1. Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method?
d. gain on sale of land ( answer )
a. dividends declared and paid is deducted while calculating cash flow from finnacing activities as dividend are paid to shareholders through whom finance is raised.
b. a loss on the sale of equipment and c. depreciation expense is added to net income in calculating net cash flow from operating activities using the indirect method as these expenses reduced the net income.
2. On the statment of cash flows a $7,500 gain on the sale of fixed assets would be
a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities ( answer )
3. on the statement of cash flows, the cash flows from financing activites section would include all of the following except
b. payments of interest on bonds payable ( answer )
It is shown in operating activities.
