When preparing the statement of cash flows using the indirect method, a non-cash expense such as amortization is added to net income to arrive at cash flows from operating activities.

Question

Quizplus · Accepted Answer

Non-cash expenses such as depreciation and amortization are added back to net income when preparing the statement of cash flows using the indirect method because they do not affect the actual flow of cash in or out of the business.

When Preparing the Statement of Cash Flows Using the Indirect