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during the 2021 fiscal year, donckers inc. was forced to sell one of its properties to the local government. the land had a carrying value of $150,000 but donckers received $160,000 from the sale, thus resulting in a gain of $10,000. if donckers uses the indirect method to prepare its yearly statement of cash flows, it should adjust for the effects of this sale by

Answer :

In the indirect approach, non-cash items are added to and subtracted from the cash flow statement after starting with net income on an accrual basis to reconcile.

When is the statement of cash flows prepared using the indirect method?

The statement of cash flows for the indirect method starts with net income or loss and then adds or subtracts from that amount non-cash revenue and expense elements to arrive at cash flow from operating activities.

When is the statement of cash flows prepared using the indirect technique if accounts receivable?

In order to determine the amount of cash created by operations, the indirect technique for preparing the statement of cash flows adjusts net income with changes in balance sheet accounts.

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