Using the indirect method, patent amortization expense for the period
A) is deducted from net income.
B) has no impact on cash flows.
C) causes cash to decrease.
D) is added to net income.

Question

Quizplus · Accepted Answer

Patent amortization expense is a non-cash expense. In the indirect method of preparing the cash flow statement, non-cash expenses are added back to net income to adjust for the fact that they reduced net income but did not involve an outflow of cash.

Using the Indirect Method, Patent Amortization Expense for the Period