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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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