A company uses the indirect method of preparing the statement of cash flows. Current year depreciation expense can be found on the
A)income statement and statement of cash flows.
B)balance sheet and income statement.
C)statement of cash flows and balance sheet.
D)income statement and statement of comprehensive income.

Question

Quizplus · Accepted Answer

Depreciation expense is reported on the income statement as an expense reducing net income. In the statement of cash flows prepared using the indirect method, depreciation is added back to net income in the operating activities section because it is a non-cash expense. It does not appear on the balance sheet directly, nor is it a part of the statement of comprehensive income.

A Company Uses the Indirect Method of Preparing the Statement