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Answer (D) is correct . The indirect method determines net operating cash flow by adjusting net income. Under the indirect method, the $5,000 cash inflow from the sale of the truck is shown in the investing section. A $2,000 loss was recognized and properly deducted to determine net income. This loss, however, did not require the use of cash and should be added to net income in the operating section.

Answer (A) is incorrect because The $5,000 inflow should be shown in the investing section.
Answer (B) is incorrect because No outflow of cash dividends occurred in Year 2.
Answer (C) is incorrect because The decrease in receivables should be added to net income.