For each of the following items, indicate by choosing the appropriate code letter, how the item should be reported in the statement of cash flows using the direct method:
-Depreciation expense.
A) Added in determining cash receipts from customers
B) Deducted in determining cash receipts from customers
C) Added in determining cash payments to suppliers
D) Deducted in determining cash payments to suppliers
E) Cash outflow - investing activity
F) Cash inflow - investing activity
G) Cash outflow - financing activity
H) Cash inflow - financing activity
I) Significant non-cash investing and financing activity
J) Is not shown

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash charge and does not appear in the cash flow statement when using the direct method. It is accounted for in the adjustments to reconcile net income to net cash provided by operating activities in the indirect method.

For Each of the Following Items, Indicate by Choosing the Appropriate