Assume revenues are received in cash and expenses,except for depreciation,are paid in cash.Based on this assumption,which of the following statements is true?
A)Net cash flows for a period are equal to net income minus depreciation expense.
B)Net cash flows for a period are equal to net income.
C)Net cash flows for a period are equal to net income plus depreciation expense.
D)Net cash flows for a period are equal to net income plus income tax expense.

Question

Quizplus · Accepted Answer

Net income is calculated as revenues minus expenses, including depreciation. However, since depreciation is a non-cash expense, it is added back to net income to arrive at the net cash flow for a period. Therefore, net cash flows for a period are equal to net income plus depreciation expense.

Assume Revenues Are Received in Cash and Expenses,except for Depreciation,are