In the cash flow statement can be prepared by two methods which one is indirect method and other one is direct method. Depreciation and amortization is the non-cash item and these two items will be added in the cash flow statement if cash flow statement prepared by the indirect method. At the preparation of income statement these two expenses has been reduced from the net profit. To discuss: The provision for depreciation and amortization added to net income to compute the net cash provided by operating activities.

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Chapter 11, Problem 65.4C

To determine

In the cash flow statement can be prepared by two methods which one is indirect method and other one is direct method.

Depreciation and amortization is the non-cash item and these two items will be added in the cash flow statement if cash flow statement prepared by the indirect method.

At the preparation of income statement these two expenses has been reduced from the net profit.

To discuss:

The provision for depreciation and amortization added to net income to compute the net cash provided by operating activities.

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