Business Finance
Explain Why Depreciation is Considered in Determining Cash Flows

Question Description

I’m working on a Business exercise and need support.

 If depreciation expense is a noncash charge, why do we consider it when determining cash flows because depreciation expense reduces taxable income, so reduces the amount of taxes paid because depreciation expense reduces net income

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Final Answer

because we added it into net income when making an indirect statement of cash flow.

New York University

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