Under the indirect approach,in preparing the cash from operations section of the Statement of Cash Flows,depreciation is added to net income because A)it is not a cash expense. B)it is a cash outflow. C)it is a source of cash. D)it is not an allowable expense in determining net income.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that reduces net income but does not involve any outflow of cash. Therefore, it needs to be added back to net income in order to arrive at the cash from operations.

Under the Indirect Approach,in Preparing the Cash from Operations Section