The statement of cash flows (indirect method) reports depreciation expense as an addition to net income because depreciation
A. causes an inflow of funds for the replacement of assets.
B. reduces reported net income of the period but does not involve an outflow of cash for that period.
C. is a direct use of cash.
D. reduces reported net income and causes an inflow of cash.
Ans: B. reduces reported net income of the period but does not involve an outflow of cash for that period.
You might also like to view...
Which is an incorrect guideline for modular programming?
A) Keep each module to a manageable size. B) Pay particular attention to the critical interfaces. C) Maximize the number of modules the user needs to modify when making changes. D) Maintain the hierarchical relationships set up in the top-down phases.
Which of the following represents the chain of command aspect of the hierarchy of authority?
A) Big decisions are handled by higher managers in Marie's company. B) Mark asked Paula to attend a meeting for him, Paula asked Bob to go with her, and Bob asked Ryan to go in his place. C) A wide span of control means a manager has many people reporting to him, and a narrow span of control means a manager has few direct reports. D) In creating a book, an editor makes the changes to the text, a typesetter sets the text on pages, a printer prints the pages, and a bindery puts it all together as books. E) A president has a vice president reporting to him, a district manager reporting to the vice president, and a supervisory manager reporting to the district manager.