On a statement of cash flows using the indirect method, depreciation expense will
A)be added to profit in the operating activities section.
B)be deducted from profit in the operating activities section.
C)appear a cash receipt in the investing activities section.
D)be ignored.

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash charge that reduces net income. In the indirect method of the statement of cash flows, it is added back to net income in the operating activities section to adjust for the non-cash reduction.

On a Statement of Cash Flows Using the Indirect Method