Explain why, when utilizing the indirect method, depreciation expenditure, depletion expense, and amortization expense are added to net income in the operational activities part of the statement of cash flows rather of being included in the net income.

Explain why, when utilizing the indirect method, depreciation expenditure, depletion expense, and amortization expense are added to net income in the operational activities part of the statement of cash flows rather of being included in the net income.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

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