Which of the following is true? Depreciation:
A) is recorded so that net book value represents fair value of assets
B) does not affect the amount of cash realized from operations as it is a non-cash flow
C) is added back to net income to calculate cash from operations under the direct method
D) represents a fund from which to purchase future assets

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense, meaning it does not directly affect cash flow from operations. It is recorded to allocate the cost of an asset over its useful life, not to represent fair value or create a fund for future purchases.

Which of the Following Is True? Depreciation