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Answer (C) is correct . Because depreciation is a noncash charge to income, it is added to accrual-basis net income in the determination of cash flows from operating activities under the indirect method.

Answer (A) is incorrect because Depreciation does not involve an inflow or outflow of cash. The purchase and the sale of property, plant, and equipment constitute investing activities, but the process of depreciating such assets is not defined as an investing activity. Depreciation is a noncash operating expense.
Answer (B) is incorrect because Depreciation is a noncash operating expense.
Answer (D) is incorrect because Depreciation should be added.