Depreciation expense is not a source of cash; however,it is subtracted from net income when determining net cash flow from operations under the direct method.

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Depreciation expense is not a source of cash and is not subtracted from net income when determining net cash flow from operations under the direct method; it is a non-cash expense and is relevant under the indirect method for adjusting net income to arrive at cash flow from operations.

Depreciation Expense Is Not a Source of Cash; However,it Is