CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Under the direct method approach to cash flow statements, depreciation is ______
A. deducted from cash flows from operations.
B. added to cash flows from operations.
C. ignored in preparing the cash flow statement.
Explanation: When preparing the cash flow statement under the direct method, depreciation is ignored because the statement is prepared by reconstructing the income statement from a cash flow perspective. The statement starts with cash received from customers and works its way down through the income statement.

User Contributed Comments 2

User Comment
davcer with the indirect method you star from NI and add depreciation
Inaganti6 OK
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