- CFA Exams
- CFA Level I Exam
- Topic 3. Financial Statement Analysis
- Learning Module 20. Understanding Cash Flow Statements
- Subject 2. Preparing the Cash Flow Statement
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 |