How Does Depreciation Affect Cash Flow Statement

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19/11/2025 1 min
How Does Depreciation Affect Cash Flow Statement

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Episode Synopsis

Depreciation affects the cash flow statement by increasing the operating cash flow, even though it does not involve any actual cash outlay. Because depreciation is recorded as an expense on the income statement, it reduces net income; however, since it is a non-cash expense, it is added back to net income in the operating activities section of the cash flow statement.
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