Why do accountants add Depreciation Expense to net income when determining net cash provided by operating activities?
A)because depreciation expense is a source of cash
B)because depreciation expense requires the outflow of cash
C)because depreciation expense is an investing activity that should be reported in the investing section of the cash flow statement
D)because it cancels the earlier deduction when calculating net income

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash charge that reduces net income. When calculating cash flows from operating activities using the indirect method, it is added back to net income to adjust for this non-cash deduction.

Why Do Accountants Add Depreciation Expense to Net Income When