In the cash flow statement of a company, I am seeing depreciation being ADDED and clubbed with the sources of funds(net income, debt incurred etc). Is this correct? Why?
thanks! Girish
- posted
15 years ago
why is depreciation sometimes listed in sources of funds?
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- posted
15 years ago
"Girish" wrote
Depreciation is an expense deducted from net income, but it isn't a cash outlay.
The cash flow statement tries to reconcile net income to the change in cash. So you add back expenses where cash isn't going out the door - depreciation, increases in payables, etc.
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- posted
15 years ago
Thanks Thomas, I was going to be a CPA and went to work for the FDIC. Never again. My life is in ruins, I was almost killed, forcibly injected, and my wife was harassed at her work and I am divorced, and now, I welcome global war or a shoot load or ard f-dic cash.
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- posted
15 years ago
Just a wild guess but maybe you haven't been taking your meds for past several days
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15 years ago
Ohkay! Got it. Glad I asked though. So just as you are adding back account payables, you must also subtract account recievables in the cash flow statement. Right.
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15 years ago
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15 years ago
Yup, paper debits and credits must be eliminated until you are left with actual cash flow.
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15 years ago