Final answer:
The statement is false. In computing net cash provided by operating activities using the indirect method, depreciation is added back to net income because it is a non-cash expense that decreases net income but does not affect cash flow.
Step-by-step explanation:
The statement that the first step in computing net cash provided by operating activities is to subtract depreciation from net income is false. In the preparation of the Cash Flow Statement, the indirect method starts with the net income and then adjusts for all non-cash transactions, including depreciation. However, depreciation is not subtracted from net income; rather, since depreciation expense reduces net income but does not involve actual cash outflow, it is added back to net income in the operating activities section.