Using the indirect method of preparing a statement of cash flows,depreciation expense for the current year is:
A) added in the operating activities section
B) added in the investing activities section
C) added in the financing activities section
D) subtracted in the operating activities section

Question

Quizplus · Accepted Answer

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

Using the Indirect Method of Preparing a Statement of Cash