Which of the Following Statements Is Incorrect,regarding the Effect of Depreciation

question 89

Multiple Choice

Which of the following statements is incorrect,regarding the effect of depreciation expense on a statement of cash flows using the indirect method?

• A)Depreciation expense is not an outflow of cash.
• B)Depreciation expense represents an inflow of cash.
• C)Depreciation expense is added in the operating activities section of the statement of cash flows.
• D)Depreciation expense is not a source of cash.
• E)Depreciation expense will reduce the net income used in determining net cash flow from operations.

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Definitions:

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Real estate, which encompasses the land, buildings situated on the land, and the inherent natural resources.

State Statute

A law enacted by the legislative body of a state government.

Quitclaim Deed

A legal document used to transfer interest, if any, in real property with no warranties regarding the title of the property.

Warehouse

A large building where raw materials or manufactured goods may be stored before their distribution for sale.