To estimate the cash flow from operations,depreciation must be added back to net income because it is a non-cash charge that has been deducted from revenue in the net income calculation.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that is subtracted from revenue to calculate net income. However, since it does not involve the outflow of cash, it needs to be added back to net income to calculate cash flow from operations. Therefore, the statement is true.

To Estimate the Cash Flow from Operations,depreciation Must Be Added