On a Statement of Cash Flows That Uses the Indirect

question 1

Multiple Choice

On a statement of cash flows that uses the indirect approach, calculation of cash flow from operations treats depreciation as an adjustment to reported net income because:

• A)depreciation is a direct source of cash.
• B)depreciation is an outflow of cash to a reserve account for the replacement of assets.
• C)depreciation reduces net income and involves an outflow of cash.
• D)depreciation reduces net income but does not involve an outflow of cash.