Practice Quiz

CPA Accountant Review Questions

Category - Accounting

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If equipment is used by a corporation in its operations and is sold at a loss, under which section on the statement of cash flows is this reported?
  1. Operating
  2. Investing
  3. Financing
  4. Supplemental
  5. It is not reported on the statement of cash flows.
Explanation
Answer - A - The loss on the sale of equipment is reported in the operating section of the statement of cash flows.

Key Takeaway: The loss (proceeds from the sale less the book value of the equipment) is reported under Operating Activities on the statement of cash flows. The loss appeared on the income statement, but did not actually reduce cash, although it did reduce net income.
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