Under the Direct Method,depreciation Expense Is Treated as an Outflow

question 45

True/False

Under the direct method,depreciation expense is treated as an outflow in the Investing Activities section of the statement of cash flows.

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Definitions:

Inventory Valuation Method

The approach a company uses to determine the cost of its inventory, affecting the cost of goods sold and profitability; common methods include FIFO, LIFO, and weighted average.

Financial Statements

Formal reports detailing the financial activities and condition of a business, including the balance sheet, income statement, and cash flow statement.

Net Income

The total earnings of a company after subtracting all expenses, including taxes and operating costs.

LIFO Inventory Valuation

Last-in, first-out method, an inventory costing method where the last items purchased are the first ones considered sold.