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    • Question

      Depreciation of ₹5 lakh is added back while

      calculating cash flows from operations under the indirect method. Why?
      A It increases cash Correct Answer Incorrect Answer
      B It is a non-operating expense Correct Answer Incorrect Answer
      C It is a non-cash expense Correct Answer Incorrect Answer
      D Both B & C Correct Answer Incorrect Answer

      Solution

      Depreciation is non-cash, though it reduces accounting profit. Hence, it’s added back in cash flow calculations.

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