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

Question

Quizplus · Accepted Answer

Amortization expense is a non-cash item that is added back to net income in the operating activities section of the statement of cash flows. This is because it represents a reduction in the value of an asset that has already been recorded as an expense on the income statement, and does not involve an actual cash outflow.

Under the Indirect Method of Preparing a Statement of Cash