Depreciation is added back to net income to determine cash from operating activities under the indirect method.

Name: Depreciation is added back to net income to determine cash from operating activities under the indirect method.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense, which means it does not involve the outflow of cash. Therefore, it is added back to net income when calculating cash from operating activities under the indirect method.

Depreciation Is Added Back to Net Income to Determine Cash