Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in
A) the cash flows from financing activities section
B) the cash flows from investing activities section
C) a separate schedule
D) the cash flows from operating activities section

Question

Quizplus · Accepted Answer

Depreciation on factory equipment is a non-cash expense and is added back to net income in the operating activities section of the statement of cash flows under the indirect method. Therefore, the correct answer is D. It is not reported in the cash flows from financing activities section or cash flows from investing activities section as it does not involve cash flow activities related to financing or investing. It is also not reported in a separate schedule as it is included in the operating activities section.

Depreciation on Factory Equipment Would Be Reported in the Statement