Net income in the operating activities category

Assignment Help Business Economics

Reference no: EM13987046

Why is depreciation added to net income in the Operating Activities category of the statement of cash flows when the indirect method is used? Depreciation provides cash and therefore must be added to net income. Depreciation was deducted in arriving at net income on the accrual basis of accounting; however, it did not require the use of cash. Depreciation expense is a negative amount in the Investing Activities section and therefore is a positive amount in the Operating Activities section. Depreciation reduced the book value of plant assets and, therefore, must be reported as an investing activity.

Reference no: EM13987046

Questions Cloud

Calculate the forces acting on the suspended meter stick : Calculate the forces acting on the suspended meter stick and the sum of the forces. Choose two different points on the stick as pivot points, and calculate the sum of the torques (moments) about each.

Find the speed of the cab just before it hits the spring : By the time the cab reached the first floor, the cab is falling at 5 m/s, at that moment, when the cab's bottom is a distance d = 4 m above a spring with spring constant k = 5x105 N/m, a safety device is activated which clamps the cab against the..

True of the cap-and-trade program : Which of the following is TRUE of the cap-and-trade program in the United States?

How does the relationship between government and policing : How does the relationship between government and policing affect the criminal justice system? Does the criminal justice system need more or less of a governmental relationship to be effective?

Net income in the operating activities category : Why is depreciation added to net income in the Operating Activities category of the statement of cash flows when the indirect method is used? Depreciation provides cash and therefore must be added to net income. Depreciation reduced the book value of..

Identify three crisis intervention models : Consider how an eclectic approach to crisis intervention might be used to respond to disasters, crises, and traumas. Reflect on the crisis, disaster, or trauma you described. Identify three crisis intervention models you might use to respond to the d..

How many photons per second are emitted by the laser : A Calcium surface (work function = 2.87 eV) is illuminated with 200 nm light from a 2 mW laser. How many photons per second are emitted by the laser?

About hidden characteristics of a good than buyers : When sellers have more information about hidden characteristics of a good than buyers have, more low-quality units are likely to be sold than high-quality units.

Determinants of aggregate productivity-output and employment : Emphasis will be on the following areas of discussion: the determinants of aggregate productivity, output and employment? what is Monetary and Fiscal policy in the IS/LM model. third degree price discrimination and the role of price elasticity of dem..

User Account

All Pages