Even though depreciation, depletion and amortization are expenses, they are considered non-cash transactions and must be subtracted from net income in the operating activities section of an indirect method cash flow statement.

Question

Quizplus · Accepted Answer

Depreciation, depletion, and amortization are non-cash expenses that are added back to net income in the operating activities section of an indirect method cash flow statement, not subtracted, because they reduce net income but do not involve an actual cash outflow.

Even Though Depreciation, Depletion and Amortization Are Expenses, They Are