Depreciation is a source of cash inflow because

a. it is a non-cash expense, so it needs to be added back to net income when using the indirect method.
b. it supplies cash for future asset purchases.
c. it is a tax-deductible cash expense.
d. it is a taxable expense.

a. it is a non-cash expense, so it needs to be added back to net income when using the indirect method.

Explanation: Depreciation is the measurement of the decline in value of assets. When using the indirect method, since net income is a starting point in measuring cash flows from operating activities, depreciation expenses must be added back to net income. Depreciation is a source of cash inflow because it is a tax-deductible non-cash expense as a result it provides a tax reduction benefit which increases cash flow.

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a

b

b

a

c

b

d

d

none of these are correct, as they are all sources of american law

a