Yesterday Company reports the following information: Depreciation expense for the year ending December 31,2012 is $17.No fixed assets were sold during 2012.What is the net cash flow from investing activities for the year ending December 31,2012?
A)$17 cash inflow
B)$251 cash inflow
C)$251 cash outflow
D)None of the above

Question

Yesterday Company reports the following information:  Depreciation expense for the year ending December 31,2012 is $17.No fixed assets were sold during 2012.What is the net cash flow from investing activities for the year ending December 31,2012?
A)$17 cash inflow 
B)$251 cash inflow 
C)$251 cash outflow 
D)None of the above

Quizplus · Accepted Answer

The depreciation expense is added back to net income in the operating activities section of the statement of cash flows, as it is a non-cash expense. Since no fixed assets were sold during 2012, there would be no cash inflow from investing activities. However, the depreciation expense would be factored into the calculation of cash flow from operating activities. Therefore, the net cash flow from investing activities for the year ending December 31, 2012 would be a cash outflow of $17 (the amount of the depreciation expense). Hence, option C is the correct answer.

Yesterday Company Reports the Following Information: Depreciation Expense for the Year