When a company uses the direct method to present the statement of cash flows,depreciation expense must be added to net income to reconcile to net cash provided by operating activities.

Question

Quizplus · Accepted Answer

In the direct method, cash flows from operating activities are reported by directly listing cash receipts and payments, so depreciation expense is not added back to net income as it is in the indirect method.

When a Company Uses the Direct Method to Present the Statement