During 2010,the Bowtie Company Reported Net Income of $1,872 Million,depreciation

question 52

Multiple Choice

During 2010,the Bowtie Company reported net income of $1,872 million,depreciation expense of $1,412 million and $978 million paid for purchases of property,plant and equipment.What would be the effect on cash flows from operating activities during 2010?

• A)Depreciation expense would increase cash flows from operations and the property, plant and equipment purchases would decrease cash flow from operations.
• B)Depreciation would increase cash flow from operations and property, plant and equipment purchases would increase cash flows from operations.
• C)Depreciation would increase cash flow from operations but the property, plant and equipment purchases would have no effect on cash flow from operations.
• D)Depreciation is a non-cash expense and would not be used to calculate cash flow from operations.