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Why depreciation is added while preparing …

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Why depreciation is added while preparing cash flow statement

Posted by Aditi Mittal 5 years, 1 month ago

CBSE > Class 12 > Accountancy

2 answers

Jitender Mittal 5 years, 1 month ago

First of all we have to understand the impact of depreciation in final accounts i.e. By charging depreciation it means our net results reduced but while preparing CFS we used indirect method thus there is no flow of cash in depreciation transaction, but our net profit already reduced thus we add back in CFS.

Rahul Yadav 5 years, 1 month ago

This depreciation added in non cash item because it minus from profit and loss account so in cash flow statment us added it show outflow of cash to decribes the total inlfow and outflow of cash

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