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Financial Reporting MCQs

Why is depreciation added back in the cash flow statement?

It is a substantial number which could skew the report if ignored

Companies handle depreciation differently so it is added back to neutralize any effects

It is non taxable

It is a transaction which will never impact cash and needs to be reversed out from its effect on net income

Answer

Correct Answer: It is a transaction which will never impact cash and needs to be reversed out from its effect on net income

Explanation:

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