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Subject 2. Preparing the Cash Flow Statement r allocation of original purchase cost to this period. As a result, expenses increase without a corresponding cash outlay. Since depreciation does not affect cash flow, it should be added back to net income to compute net CFO.
3. <span>Add back losses and subtract gains from investing or financing activities. Examples include gains/losses from sale of property, plants and equipment (investing activity) or gains/losses from early retirement of debt (financing activity). Why? Disposal of fixed
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