CFA Practice Question

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CFA Practice Question

Under the indirect method, depreciation expenses on fixed assets are recorded on the statement of cash flows ______.
A. added back to net income as part of cash flows from operations
B. as cash outflow from investing activities
C. They are not recorded on the cash flow statement.

User Contributed Comments 3

User Comment
achu Depreciation is reflected in NI, and must be added back to compute CFO. Simple concept- don't over think it!!!
dlukas The indirect method starts with NI and adds back noncash expenses to arrive at CFO.

Under the direct method, neither depreciation nor other cash expenses are shown.
bidisha Nor other NON cash expense are shown
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