To prepare the statement of cash flows using the indirect method ________.
A)net income is added to cash
B)depreciation expense is added to net income
C)an increase in accounts receivable is added to net income
D)net income is subtracted from cash

Question

Quizplus · Accepted Answer

Depreciation expense is added back to net income in the indirect method of preparing the statement of cash flows because it is a non-cash expense that reduced net income but did not involve an outflow of cash.

To Prepare the Statement of Cash Flows Using the Indirect