Multiple choice

Depreciation on fixed asset is a/an

  1. source of funds

  2. application of funds

  3. neither source nor application of funds

  4. increase in working capital

Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a Funds Flow Statement, depreciation is considered a source of funds. Since it is a non-cash expense, it is added back to the net profit to determine the actual funds generated from operations.