Explain why depreciation is added to the net income in the operating activities section of the cash flow statement.

The following data are taken from the records of Al Zmil Company Additional information: 1. Held- for-collection investments carried at a cost of $86,000 on 31 December 2020 , were sold in 2021 for $68,000. The loss was incorrect charged directly to Retained Earnings. 2. Plant assets that cost $120,000 and were 80% depreciated were sold in 2021 for $16,000. The loss was incorrectly charged directly to Retained Earnings. 3. Net income reported on the income statement for the year was $118,000. 4. Dividends paid amounted to $20,000. 5. Depreciation charged for the year was $56,000. Explain why depreciation is added to the net income in the operating activities section of the cash flow statement