Question

Last year Art charged $5,880,000 Depreciation on the Income Statement of Andrews. If early this year Art purchased a new depreciable asset, the effect on Andrews's financial statements would be (all other items remaining equal):

Answer 1

Answer:

Increase Net Cash from operations

Explanation:

Depreciation is an element for Non-Cash. This is, there is no cash payment involved. If depreciation is an allowable expense then it reduces the company's tax burden. In other words, by paying depreciation as allowance cost the corporation can save the tax amount. The depreciation thus raises Net Cash From Service.