Which of the Following Statements Best Explains the Correct Handling

question 68

Multiple Choice

Which of the following statements best explains the correct handling of depreciation on the statement of cash flows when using the indirect method?

• A)Depreciation is subtracted from net income because it causes a loss when the related plant asset is sold.
• B)Depreciation expense is a noncash expense that was subtracted to derive the accrual-basis net income, hence added to net income in the cash flows from operating activities section.
• C)Depreciation is subtracted in the cash flows from investing activities section because it reduces the book value of the corresponding plant asset.
• D)Depreciation adds to the company's cash account to help pay for new equipment.

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Definitions:

Government Funding

Financial resources provided by the government to support organizations, programs, or projects benefiting the public.

Biochemist

A scientist specializing in the chemical processes and substances that occur within living organisms.

Attitude Change

Any significant modification of an individual’s attitude. In the persuasion process, this involves the communicator, the communication, the medium used, and the characteristics of the audience. Attitude change can also occur by inducing someone to perform an act that runs counter to an existing attitude.

Persuasion

The process of influencing someone's beliefs, attitudes, intentions, motivations, or behaviors through communication.