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متابعة

Depreciation is incorporated in cash flows because it:

<p>(<strong>a) Is unavoidable cost,</strong></p> <p><strong>(b) Is a cash flow,</strong></p> <p><strong>(c) Reduces Tax liability,</strong></p> <p><strong>(d) Involves an outflow.</strong></p> <p> </p>

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تم إضافة السؤال من قبل VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
تاريخ النشر: 2014/09/24
Anayatullah Tahir
من قبل Anayatullah Tahir , Finance Manager , Etqan Projects

Non of the answer is correct, as depreciation is incorporated in cash flows because it is a non cash item reported in operating income.

So it is added back to operating income to arrive at operating cash flows

Jose Miguel Lucas Martins
من قبل Jose Miguel Lucas Martins , IT Director - Robotic Process Automation (RPA) , Novo Banco

Because it reduces tax liability (in financial terms, that effect is called a "tax shield")

VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
من قبل VENKITARAMAN KRISHNA MOORTHY VRINDAVAN , Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.

Answer option (c)   >>>>>>>>>>  Reduces Tax liability

a)

 

Depreciation is a not an outflow cost. So in order to counteract its impact (when calculated the profit & loss account), it should be deducted in Cash flow Statement 

Sara Khan
من قبل Sara Khan , financial and admin assistant , Ministry Of Defence

it is unavoidable cost..

Khaled Mohee Eldeen Abbas Mahmoud
من قبل Khaled Mohee Eldeen Abbas Mahmoud , Chartered Accountant # 10465 , Self-employed

I think the answer is A is unavoidable cost.

In the operating activities section of the cash flow statement, add back expenses that did not require the use of cash. Examples are depreciation, depletion, and amortization expense.

Ahmed Abd Alwahab Awad Ibrahim
من قبل Ahmed Abd Alwahab Awad Ibrahim , Chief Accounting , ICCDP

    (c) Reduces Tax liability,

It one of Tax Shield items

Khaled Abdelrehim ACCA DipIFR CMA
من قبل Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

reduces tax liability

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