The Statement of Cash Flows (Indirect Method) Reports Depreciation Expense

Multiple Choice

The statement of cash flows (indirect method) reports depreciation expense as an addition to profit because depreciation does which of the following?

A) Causes an inflow of funds for the replacement of assets.
B) Is a direct use of cash.
C) Reduces reported profit of the period but does not involve an outflow of cash for that period.
D) Reduces reported profit and causes an inflow of cash.