Which of the following statements best describes the reason Depreciation Expense is added to net income when preparing the statement of cash flows?

Multiple Choice

Depreciation expense originally reduced net income, but it actually represents a cash inflow for the company.

Depreciation expense originally reduced net income, but the expense does not involve a cash payment $($outflow$).$

Depreciation expense originally reduced net income, but it actually represents a cash outflow for the company.

Depreciation expense is not included in net income, therefore, its cash effect must be accounted for separately.