Question: When preparing the operating activity section of the statement of cash flows using the indirect method, which of the following statements regarding gains and losses

When preparing the operating activity section of the statement of cash flows using the indirect method, which of the following statements regarding gains and losses on fixed assets is correct?

Multiple choice question.

Losses are added back to net income and gains are subtracted from net income.

Losses are subtracted from net income and gains are added to net income.

Net income should not be adjusted for any gains or losses on the sale of fixed assets.

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