Why Is Depreciation Added Back On The Cash Flow Statement? - Tax and Accounting Coach

Описание: Why Is Depreciation Added Back On The Cash Flow Statement? Have you ever wondered why certain expenses are added back to your business’s cash flow? In this informative video, we’ll explain why depreciation appears on the cash flow statement and how it affects your company's financial picture. We’ll start by defining what depreciation is and why it’s considered a non-cash expense. You’ll learn how depreciation spreads the cost of large assets over several years without actually reducing cash during the period. We’ll also discuss how this impacts net income and why adjusting for depreciation provides a clearer view of your business’s actual cash flow. Additionally, we’ll explain the concept of the tax shield — how depreciation lowers taxable income and results in reduced taxes, ultimately increasing your available cash. Understanding these adjustments is essential for accurately assessing your company’s financial health. Whether you’re a business owner, accountant, or investor, knowing why depreciation is added back on the cash flow statement is key to interpreting financial statements correctly. Join us for this straightforward explanation and subscribe to our channel for more practical tips on accounting and financial management.

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About Us: Welcome to the Tax and Accounting Coach channel! Our mission is to make tax and accounting topics approachable for everyone, whether you are a small business owner or someone looking to improve your personal finance skills. Here, you'll find content covering tax deductions, accounting basics, small business taxes, and practical tips for tax filing and bookkeeping essentials. We also share insights on IRS regulations, financial statements, and effective tax planning strategies to help you stay compliant and financially savvy.