The inclusion of a monthly depreciation charge for fixed asset usage will increase the net cash flows in that period.

Question

Quizplus · Accepted Answer

The monthly depreciation charge for fixed asset usage is a non-cash expense, meaning it does not involve an actual outflow of cash. Therefore, it does not increase the net cash flows in that period. In fact, it reduces the net income, which in turn can reduce the amount of taxes owed, increasing the cash flow indirectly.

The Inclusion of a Monthly Depreciation Charge for Fixed Asset