Question: Gail doesn't understand why losses are added and gains are deducted from profit when calculating cash provided (used) by operating activities in the indirect method.

Gail doesn't understand why losses are added and gains are deducted from profit when calculating cash provided (used) by operating activities in the indirect method. She argues that losses must be deducted and gains added as they are on the income statement. Explain to Gail why she is wrong.

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