When Preparing the Statement of Cash Flows Using the Indirect

question 143

True/False

When preparing the statement of cash flows using the indirect method,depreciation expense is subtracted from net income under operating activities.

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances before preparing financial statements.

Operating Expenses

Costs associated with the day-to-day functions of a business excluding the cost of goods sold.

Fiscal Year

A fiscal year is a one-year period designated for accounting and financial reporting purposes, differing from the traditional calendar year.

Ledger

The principal book or computer file for recording and totaling economic transactions measured in terms of a monetary unit of account by account type.