Define depreciation expense as it appears on the income statement.How does depreciation affect cash flow?
Accounting depreciation is the provision of an asset's initial cost over time. Depreciation expenditure on an income statement is the cost of the assets initial cost allocated to the period covered by the income statement.
Depreciation expenditure isn't a cash flow. Depreciation as an expense category distress cash flow however for the reason that it is tax-deductible. Depreciation expense lesser a company's taxable income and thus its income tax liability. In this manner depreciation reduces cash outflows.