Explain why depreciation is shown as an adjustment

Reference no: EM133610197

Case: Property, plant, and equipment (plant assets) generally represent a material portion of the total assets of most companies. Accounting for the acquisition and use of such assets is therefore an important part of the financial reporting process.

Required:

Question 1: Distinguish between revenue and capital expenditures and explain why this distinction is important.

Question 2: Briefly define depreciation as used in accounting.

Question 3:. Identify the factors that are relevant in determining the annual depreciation and explain whether these factors are determined objectively or whether they are based on judgment.

Question 4: Explain why depreciation is shown as an adjustment to cash in the operations section on the statement of cash flows.

Reference no: EM133610197

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