In applying the direct method,depreciation expense is ________.
A)added to net income because purchases of the depreciable long-term assets are investing activities
B)subtracted from net income because it is a non-cash expense
C)subtracted from cash from operating activities because it is a non-cash expense
D)not shown on the statement of cash flows prepared using the direct method

Question

Quizplus · Accepted Answer

Depreciation expense is a non-cash expense and does not affect cash flow, so it is not shown on the statement of cash flows when using the direct method. The direct method focuses on the actual cash inflows and outflows from operating activities, excluding non-cash items like depreciation.

In Applying the Direct Method,depreciation Expense Is ________