A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000.

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Question:

A company sold equipment for $5,000. The equipment originally cost $16,000 and had accumulated depreciation of $12,000. Which of the following statements is correct regarding the statement of cash flows prepared using the indirect method to report operating activities?

A. $5,000 will be added to the net income

B. Investing activities will reflect proceeds of $4,000 from the sale.

C. $1,000 will be added to the net income

D. $1,000 will be deducted from net income.