Which of the following statements is false?
A) Depreciation expense is added to profit in the operating activities section of the statement of cash flows because it had no cash effect on profit under the indirect method.
B) Depreciation expense is included in the investing activities section of the cash flow statement.
C) The only cash effect for depreciation is the tax savings provided by its deduction to derive taxable income.
D) Depreciation is a non-cash expense that reduces profit but involves no outflow of cash.

Question

Quizplus · Accepted Answer

Depreciation expense is not included in the investing activities section of the cash flow statement; it is added back to net income in the operating activities section under the indirect method because it is a non-cash expense that reduced net income. Investing activities typically include cash flows from the purchase and sale of physical assets like property, plant, and equipment, not depreciation expenses.

Which of the Following Statements Is False