While preparing a statement of cash flows using the indirect method, the Depreciation Expense:
A)is added back as an adjustment to Net Income in the operating activities section.
B)is shown as a negative cash flow in the investing activities section.
C)is added back to Purchases of Plant Assets under investing activities.
D)is shown as a negative cash flow under operating activities.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash expense that decreases net income, so it must be added back as an adjustment in the operating activities section to reflect the actual cash flows of the business.

While Preparing a Statement of Cash Flows Using the Indirect