Depreciation expense is added back to net income in calculating operating cash flows.Group startsTrue or False

When using the indirect method to calculate net cash flows from operating activities, we must remove all accruals from net income so that only the cash portion remains.Group startsTrue or False

Which of the following statements best describes the reason Depreciation Expense is added to net income when preparing the statement of cash flows?Multiple ChoiceDepreciation expense originally reduced net income, but it actually represents a cash inflow for the company.Depreciation expense originally reduced net income, but the expense does not involve a cash payment (outflow).Depreciation expense originally reduced net income, but it actually represents a cash outflow for the company.Depreciation expense is not included in net income, therefore, its cash effect must be accounted for separately.

If depreciation expense is not a cash flow, why do we have to subtract it and add it back? Why not just ignore it?

A decrease in accounts payable results in a subtraction in calculating operating cash flows.Group startsTrue or False

Under the indirect method, the operating activities section of the cash flow statement begins with net income.Group startsTrue or False