When Preparing the Statement of Cash Flows Using the Indirect

question 46

Multiple Choice

When preparing the statement of cash flows using the indirect method for determining net cash flows from operating activities, depreciation is added to net income because:

• A) It was deducted as an expense on the income statement, but does not require cash.
• B) It was deducted as an expense on the income statement and affects the amount of cash.
• C) It is a significant portion of the year's expenses.
• D) It represents a source or inflow of cash.

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Definitions:

Adaptation Process

The method by which individuals or groups adjust to changes in their environment or circumstances.

Scope

The extent of the area or subject matter that something deals with or to which it is relevant; often defined at the beginning of a project.

Venue

A place where an event or meeting is held.

Emotional State

An individual's current feelings or mood, which can influence their thoughts and behavior.