Why is depreciation added back in the cash flow statement?
- A It is a non-cash expense that reduced net income without any cash outflow
- B It represents cash received
- C It is a financing item
- D It reverses a tax charge
Answer
It is a non-cash expense that reduced net income without any cash outflow
The indirect method starts from net income and reverses non-cash items and working capital movements to reach operating cash flow.





