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On the statement of cash flows in which the operating activities section is prepared under the indirect method, depreciation is treated as an adjustment to
On the statement of cash flows in which the operating activities section is prepared under the indirect method, depreciation is treated as an adjustment to reported net earnings because depreciation
1) Is a direct inflow of cash from investing activities.
2) Reduces reported net earnings but does not involve an outflow of cash.
3) Reduces reported net earnings and involves an inflow of cash.
4) Is an inflow of cash to a reserve account for replacement of assets.
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