Why Is Depreciation Expense Added to Net Income When Reconciling

question 126

Multiple Choice

Why is depreciation expense added to net income when reconciling net income to net cash provided by operating activities?

• A)Because depreciation expense represents a cash inflow
• B)Because depreciation expense is a tax deduction that reduces the payment of taxes
• C)Because depreciation expense conserves cash outflows for taxes
• D)Because depreciation expense reduces net income but it has no effect on cash,so we add depreciation expense to net income to cancel the deduction

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