The indirect method for reporting cash flows from operating activities can create an erroneous impression about noncash expenses

(such as depreciation). What is the impression, and why is it erroneous?

PLEASE CHOOSE 1 ANSWER IN THE ( )

The erroneous impression is that depreciation (is a source of cash, is an adjustment of net income, reduces cash flows from operating activities) because it is (added to, not included in, subtracted from) net income to determine cash flow from operations. Depreciation is an allocation of an asset's original cost to expense that (does, does not) entail a current cash outlay; that is, depreciation is a (cash inflow, cash outflow, noncash expense). It is (added to net income, excluded from the calculation of net income, subtracted from net income) when using the indirect method only to (offset its addition, offset its deduction), in computing net income.