To prepare the statement of cash flows using the indirect method,depreciation expense is ________.
A)added to net income
B)subtracted from net income
C)included as an item in the financing section
D)included as an item in the investing section

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash expense that reduces net income on the income statement. When preparing the statement of cash flows using the indirect method, depreciation expense is added back to net income in the operating activities section to adjust for the fact that it did not actually use any cash.

To Prepare the Statement of Cash Flows Using the Indirect