Accounting,, please helpppp,, what effect does the journal entry to book depreciation have on the amount of ,,

Question

what effect does the journal entry to book depreciation have on the amount of cash generated by operating activities?

Answer 1

What is the context? If you're learning the cash flow statement, depreciation needs to be added back to profit before tax in order to arrive at the net cash from op'g activities. Here's the top part of a sample cash flow statement using the indirect method:

Cash flows from operating activities
Profit before taxation 3,350
Adjustments for:
Depreciation 450
Foreign exchange loss 40
Investment income (500)
Interest expense 400
Sub-total 3,740

Increase in trade and other receivables (500)
Decrease in inventories 1,050
Decrease in trade payables (1,740)
Sub-total : Cash generated from operations 2,550
Interest paid (270)
Income taxes paid (900)

Net cash from operating activities 1,380

Answer 2

when we adjust the depreciation entry, we have debited the depreciation expense and credited to accumulated depreciation.

the depreciation itself doesn't invlove any money. when you caculate the operation activites, count the depreciate expense

Answer 3

none. No cash is used or generated by depreciation.