why we have to add back depreciation in cash flow statement (operating activities)?

Answer 1

You don't write a check for it.
The cash flow statement is to explain if you made a profit where did it go. So anything like depreciation and amortization that aren't expenses that are paid in cash have to be added back. Other adjustments are changes in AR and AP that explain why you don't have all the money you earned.
When you sell a fixed asset like a vehicle you might get a check for $500 but have a value of what you paid for it less accumulated depreciation of a different amount so you have to adjust to show why you have the money in a different amount.

Answer 2

Cash Flow Depreciation

Answer 3

Depreciation Cash Flow

Answer 4

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RE:
why we have to add back depreciation in cash flow statement (operating activities)?

Answer 5

Depreciation is added back as a reconciling item to net income when using the indirect method of cash flows. As you know, net income was reduced by the current period depreciation (depreciation expense) without the effect of reducing your cash (because the credit was to accumulated depreciation). So in order to reconcile net income to cash flows from operations, non-cash expenses like depreciation is added back. Other items that you have to add back includes, discount amortization and equity in earnings of an investment among others.

Answer 6

Because depreciation does not involve a cash inflow or outflow. When the asset was purchased, it already was listed as an outflow under Cash Used In Investing Activities. After that, all the depreciation entries are just journal entries, none of them involving cash.

Answer 7

The depreciation in cash flow statement is added at the inflow or at the outflow?

Answer 8

1

Answer 9

no