In Creating a Statement of Cash Flows Using the Indirect

question 54

Multiple Choice

In creating a statement of cash flows using the indirect method, which of the following statements is TRUE about depreciation expense?

• A) It is added back as an adjustment to net income in the operating activities section.
• B) It is shown as a negative cash flow in the investing activities section.
• C) It is added back to purchases of plant assets under investing activities.
• D) It is shown as a negative cash flow under operating activities.

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Definitions:

Reproduction

Processes by which organisms produce offspring.

Rodents

A large order of mammals characterized by two continuously growing incisors in the upper and lower parts of their mouth, which must be kept short by gnawing.

Teeth

Hard, calcified structures in the jaws of many vertebrates, used for biting, chewing, and sometimes for defense.

Grow Continuously

A process referring to entities that do not stop increasing in size or number over time, either naturally or through external intervention.