Cash flow from operations worked out under direct method and indirect method: options: a. will be one and same b. will be different (direct method cash flow will be higher than indirect method) c. will be different (direct method cash flow will be lower than indirect method) d, will be different to the extent of differences in depreciation between slm and wdv methods

Cash flow from operations worked out under direct method and indirect method: options: a. will be one and same b. will be different (direct method cash flow will be higher than indirect method) c. will be different (direct method cash flow will be lower than indirect method) d, will be different to the extent of differences in depreciation between slm and wdv methods

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 6MCQ: Which of the following statements is true? a. Net cash flow from operating activities must be...

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2)When calculating free cash flows, which of the following statements is NOT true regarding the depreciation? Group of answer choices A)As an accrual, depreciation does not factor into free cash flow calculations. B)Depreciation is an accrual, not a cash flow. C)Depreciation create a tax shield. D)Depreciation is first removed and the subsequently added back in when calculating free cash flows.
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The indirect approach subtracts depreciation costs from net income before calculating operating cash flow.
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