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  • Exam Code: ACA-Developer
  • Exam Name: ACA Developer Certification
  • Version: V12.75     Q & A: 69 Questions and Answers

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NEW QUESTION: 1
In a statement of cash flows in direct method, depreciation expense should be presented as:
A. An inflow of cash.
B. A deduction from profit in converting profit or loss to net cash flows from operating activities.
C. An outflow of cash.
D. An addition to profit in converting profit or loss to net cash flows from operating activities.
Answer: D
Explanation:
Net cash flow from used by operating activities may be reported indirectly by removing from profit or loss the effects of1) deferrals of past operating cash flows,2) accruals of expected future operating cash flows.3) income or expense items related to financing and investing cash flows, and4) noncash transactions. These adjustments include such items as depreciation, amortization of patents, amortization of bond discount and bond premium gains and losses. changes during the period in trade receivables, changes in inventory, and changes in accounts payable and accrued liabilities. In the reconciliation of profit or loss to net cash from used by) operations, depreciation a noncash expense) is added to profit or loss.

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