If depreciation expense is $38,000, how will it be shown on the statement of cash flows?
A) Depreciation will not be shown in the statement of cash flows
B) Depreciation will be shown in investing activities as an increase in cash of $ 38,000.
C) Depreciation will be shown in financing activities as a decrease in cash of $ 38,000.
D) Depreciation will be shown in operating activities as an increase in cash of $ 38,000.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash charge that reduces net income. On the statement of cash flows, it is added back to net income in the operating activities section because it does not involve an actual outflow of cash, effectively increasing cash flow by the amount of the depreciation expense.

If Depreciation Expense Is $38,000, How Will It Be Shown