Question

Which of the following transactions is included in the operating activities section of a cash flow statement prepared using the indirect method?

A. Gain on sale of plant asset.
B. Sale of property, plant and equipment.
C. Payment of cash dividend to the shareholders.
D. Issuance of common stock to the shareholders.

Answer 1

The operating activities section of the cash flow statement includes the sale of property, plant and equipment. Option B is correct.

Step-by-step explanation:

The operating activities section of the cash flow statement prepared using the indirect method includes transactions that relate to a company's core operations. The correct option from the given choices is B. Sale of property, plant and equipment.

This transaction is considered an operating activity because it represents the sale of a long-term asset that is used in the company's day-to-day operations. The cash received from the sale would be reported as an inflow in the operating activities section of the cash flow statement.