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Define depreciation expense as it appears on the income statement. How does depreciation affect cash flow?
The term accounting depreciation is the allocation of an asset's initial cost over time. Depreciation expenditure on an income statement is the amount of the asset's initial cost allocated to the period that is covered by the income statement.
The expense of Depreciation is not a cash flow. Depreciation as an expense category influences cash flow, though, because it is tax-deductible. Depreciation expense lowers a company's taxable income and, hence its income tax liability. In this way depreciation decreases cash outflows.
Interest Rates The payment borrowers make for the use of the funds that they borrow and the payment that lenders demand for the use of the funds they lend (termed interest ) w
FIXED ASSETS 200 000 LONG TERM LIABILITIES CURRENT ASSETS CASH 40 000 LOAN
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