Question: Why is depreciation expense added to net income (indirect method) on the statement of cash flows?

Why is depreciation expense added to net income (indirect method) on the statement of cash flows?

Step by Step Solution

★★★★★

3.44 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Depreciation expense is a noncash expense That is each pe... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

72-B-A-I-A (909).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Q:

Why is depreciation expense added to net earnings on the statement of cash flows when using the indirect method of reporting cash flow from operations?

Q:

Shown below is selected information from the financial records of Merris Corporation as of December 31, 2019: Inventory $165,000 Cash purchase of equipment $29,000 Cash collected fram customers...

Q:

Why is depreciation expense added back to the net income of a company to find the operating cash flow?

Q:

Depreciation Expense is when preparing the indirect method of the statement of cash flows. subtracted from net income because the expense involves a cash outflow added back to net income because the...

Q:

Crown Points Pasta has the following financial statements: Crown Points Pasta Balance Sheets As of December 31, 2019, and 2020 2020 2019 Assets Cash $270,102 $256,270 Accounts receivable 121,640...

Q:

The Carpet Companys 2019 and 2020 balance sheets included the following items: December 31 2020 2019 Debits Cash $10,500 $ 4,000 Accounts receivable 8,000 9,000 Merchandise inventory 21,000 18,000...

Q:

The Nike Companys 2013 and 2014 balance sheets included the following items: December 31 2014 2013 Debits Cash $10,500 $ 4,000 Accounts...

Q:

Going for Broke Limiteds 2020 and 2021 balance sheets included the following items: December 31 Debits 2021 2020 Cash...

Q:

The income statement and additional data of Bolton Travel Products, Inc., follow: (Click the icon to view the income statement.) (Click the icon to view the additional data.) Requirements 1. Prepare...

Q:

5. When preparing a statement of cash flows using the indirect method, a gain on sale of land is deducted from net income to arrive at net cash flows from operating activities. 6. When preparing a...

Q:

A company has a capital structure made up of bonds of $9m, common stock of $15m and preferred stock of $1m. The company operates at its target capital structure. The pre-tax costs of debt are 4%,...

Q:

Identify the level of measurement for each of the variables below. (Qualitative: nominal, ordinal or Quantitative: ratio, interval) a. Gender (f = female, m = male) b. Racial-ethnic group (b = Black,...

Q:

Use slopes t o show that the quadrilateral with vertices a t ( 5 , 8 ) , ( - 1 2 , 4 ) , ( - 9 2 , 1 1 ) and ( 9 , 1 ) i s a parallelogram. The line that contains the points ( 5 , 8 ) and ( - 9 2 , 1...

Q:

As in Exercise 10.1, Jack and Jill are independently struggling to pass their last (one) class required for graduation. Jack needs to pass Calculus III, but he only has probability 0.30 of passing....

Q:

NoNuns Cos. has a 25 percent tax rate and has $350 million in assets, currently financed entirely with equity. Equity is worth $37 per share, and book value of equity is equal to market value of...

Q:

Laura is a single taxpayer living in New Jersey with adjusted gross income for the 2012 tax year of $35,550. Laura's employer withheld $3,300 in state income tax from her salary. In April of 2012,...

Q:

Mike sells his home to Jane on April 2, 2015. Jane pays the property taxes covering the full calendar year in October, which amount to $2,500. How much may Mike and Jane each deduct for property...

Q:

Janet needs an elevator seat attached to her stairs since she has a medical condition that makes her unable to climb the stairs in her house. The $10,000 spent on the elevator seat does not increase...

Q:

How did the purpose of the event, the physical setting, and the audience factor into your analysis of each speakers effectiveness?

Q:

On June 10, Harris Company purchased $9,000 of merchandise from Goetz Company, terms 3/10, n/30. Harris pays the freight costs of $400 on June 11. Goods totaling $600 are returned to Goetz for credit...

Q:

The adjusted trial balance of Dredge Company shows these data pertaining to sales at the end of its fiscal year, October 31, 2012: Sales Revenue $900,000; Freight-out $14,000; Sales Returns and...

Q:

Presented below is information for Yu Co. for the month of January 2012. Cost of goods sold ...... $212,000 Rent expense ........ $32,000 Freight-out .......... 7,000 Sales discounts ......... 8,000...

Q:

A network good has low switching costs True False

Q:

Below is a picture of the increase and decrease keys from the notes Heres the Main template: import java.util.Scanner; public class Main { public static final char WALL = '@'; public static final...

Q:

Check my work mode : This show O A regression model to predict Y, the state-by-state 2005 burglary crime rate per 100,000 people, used the following four state predictors X, = median age in 2005, X2...