Question

Lincoln Restaurants reported net income in 2019 of $48.10 million and depreciation expense of $51.00 million. It also reported additions to property and equipment of $165.10 million. Using the indirect method of preparing the statement of cash flows, how will these items impact the 2019 statement of cash flows

Answer 1

Answer and Explanation:

The impact of each item is as follows

Net income reported = shown in the operating activities

Depreciation expense = added to the net income and shown in the operating activities

Additions to the property and equipment = Since there is an addition that means the property and equipment are purchased so it would be shown in the investing activities under the negative sign as it is cash outflow