On the statement of cash flows using the indirect method patent amortization expense will
A) be added to net income in the operating section.
B) be deducted from net income in the operating section.
C) appear as an inflow of cash in the investing section.
D) appear as an outflow of cash in the investing section.

Question

Quizplus · Accepted Answer

Patent amortization expense is a non-cash expense that is added back to net income in the operating section of the cash flow statement when using the indirect method. This adjustment is made because the expense reduces net income on the income statement, but it does not involve an actual outflow of cash.

On the Statement of Cash Flows Using the Indirect Method