Question

Currently Acre is charged $3,693,600 Depreciation on the Income Statement of Andrews. Andrews is planning for an increase in this depreciation. On the financial statements of Andrews will this?

Answer 1

Answer: C)Increase Net Cash from Operations on the Cash Flow Statement

Step-by-step explanation:

The Cash Flow Statement deals with only cash transactions of a business in an effort to know just how much actual cash the business has. The Operations section of the Cash Flow Statement is derived from the Net Income and to get to the Net Income, Depreciation is removed. Because Depreciation is a non-cash expense, and does not actually reduce cash, it is added back when calculating cash from Operations. A larger depreciation therefore would bring in more cash from Operations in the Cash Flow statement.