Explain Why Depreciation is Considered in Determining Cash Flows

timer Asked: Sep 2nd, 2014
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Question Description

 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

Tutor Answer

School: New York University

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

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