On a statement of cash flows, depreciation expense is:
A)subtracted from net income in the computation of the net cash provided by operating activities.
B)added to net income in the computation of the net cash provided by operating activities.
C)treated as a cash outflow in the computation of the net cash used in investing activities.
D)treated as a cash inflow in the computation of the net cash used in investing activities.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash charge that reduces net income on the income statement. On the statement of cash flows, it is added back to net income in the operating activities section to adjust for the fact that it did not involve an actual outflow of cash.

On a Statement of Cash Flows, Depreciation Expense Is