Depreciation Is Added Back to Net Income in a Statement

question 209

Multiple Choice

Depreciation is added back to net income in a statement of cash flows prepared using the indirect method because it:

• A)reduces net income but not cash.
• B)is a cash inflow.
• C)is a revenue.
• D)is a valuation concept.

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Definitions:

Carolina

Originally a British colony in North America, later split into North Carolina and South Carolina during colonial times.

Hierarchical

Pertaining to a system that ranks people or things above one another in a series of levels or orders.

Linchpin

A critical element, person, or thing that holds something together or is essential to its stability and operation.

Atlantic Trading System

The network of trade routes connecting Europe, Africa, and the Americas from the 16th to the 19th century, facilitating the exchange of goods, people (including slaves), and culture.