In a Statement of Cash Flows (Indirect Method), Depreciation Is

question 26

Multiple Choice

In a statement of cash flows (indirect method) , depreciation is treated as an adjustment to reported net income because depreciation

• A) reduces the reported net income but does not involve an outflow of cash.
• B) reduces the reported net income and involves an inflow of cash.
• C) is an inflow of cash to a reserve account for asset replacement.
• D) usually represents a significant portion of operating expenses.

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