Which of the following statements regardin

问题单项选择题

Which of the following statements regarding depreciation expense in the cash flow statements is TRUE Depreciation is:（）

A. added back to net income when determining CFO using the direct method.

B. added back to net income when determining CFO using the indirect method.

C. considered a cash item.

答案

参考答案：B

解析：

Depreciation is a non-cash expense. Only in the indirect method is depreciation added back to net income when determining CFO because net income is only used in the indirect method and not the direct method. The direct method instead starts with cash sales and works down the income statement.