For the fiscal year that just ended, Sterling Enterprises had an increase in its inventory balance and a loss on the sale of equipment. If Sterling uses the indirect method to compute its net cash provided by operating activities, it should adjust its net income by

A : deducting the amount of the loss on the sale of equipment and adding the amount of the increase in inventory.

B : adding the amount of the loss on the sale of equipment and deducting the amount of the increase in inventory.

C : deducting both the amount of the loss on the sale of equipment and the amount of the increase in inventory.

D : adding both the amount of the loss on the sale of equipment and the amount of the increase in inventory.