Skip to main content

Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

The depreciation cash flow and its purpose. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Expenses refer to the costs incurred to carry out primary as well as secondary activities of the business. It refers to the outflow of cash, not necessarily immediate outflow, against goods or services. Depreciation: It is a decrease in the value of asset due and tear of a fixed asset over its useful life. Thus, it is a non-cash expense. Total expenses includes cash as well as non-cash expenses i.e., any expense incurred during the financial year, whether paid or not. The secondary purpose for depreciation expense is depreciation shield. Depreciation expense is a non-cash expense. It is deducted from net income as an expense but is added back to it while computing cash flow because depreciation is non-cash expense (it doesn’t lead to inflow or outflow of cash).

The depreciation cash flow and its purpose. Introduction: ‘Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to evaluate the net income generated in a particular period. Expenses refer to the costs incurred to carry out primary as well as secondary activities of the business. It refers to the outflow of cash, not necessarily immediate outflow, against goods or services. Depreciation: It is a decrease in the value of asset due and tear of a fixed asset over its useful life. Thus, it is a non-cash expense. Total expenses includes cash as well as non-cash expenses i.e., any expense incurred during the financial year, whether paid or not. The secondary purpose for depreciation expense is depreciation shield. Depreciation expense is a non-cash expense. It is deducted from net income as an expense but is added back to it while computing cash flow because depreciation is non-cash expense (it doesn’t lead to inflow or outflow of cash).

Solution Summary: The author explains depreciation cash flow and its purpose. Income Statement shows revenue earned and expenses incurred over a period of time.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

See similar textbooks

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 3, Problem 13.2STQ

Chapter 3, Problem 13.4STQ

Students have asked these similar questions

how can depreciation be a cash flow?

What would the return on assets be?

Demonstrates the difference between depreciation costs as expenses and the cash flow generated by the purchase of a fixed asset? Give an example?

Chapter 3 Solutions

Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 3 - Prob. 1.1STQ Ch. 3 - Prob. 1.2STQ Ch. 3 - Prob. 2.1STQ Ch. 3 - Prob. 2.2STQ Ch. 3 - Prob. 2.3STQ Ch. 3 - Prob. 3.1STQ Ch. 3 - Prob. 3.2STQ Ch. 3 - Prob. 3.3STQ Ch. 3 - Prob. 3.4STQ Ch. 3 - Prob. 3.5STQ

Ch. 3 - Prob. 4.1STQ Ch. 3 - Prob. 4.2STQ Ch. 3 - Prob. 4.3STQ Ch. 3 - Prob. 5.1STQ Ch. 3 - Prob. 5.2STQ Ch. 3 - Prob. 5.3STQ Ch. 3 - Prob. 6.1STQ Ch. 3 - Prob. 6.2STQ Ch. 3 - Prob. 7.1STQ Ch. 3 - Prob. 7.2STQ Ch. 3 - Prob. 7.3STQ Ch. 3 - Prob. 8.1STQ Ch. 3 - Prob. 8.2STQ Ch. 3 - Prob. 8.3STQ Ch. 3 - Prob. 8.4STQ Ch. 3 - Prob. 9.1STQ Ch. 3 - Prob. 9.2STQ Ch. 3 - Prob. 9.3STQ Ch. 3 - Prob. 10.1STQ Ch. 3 - Prob. 10.2STQ Ch. 3 - Prob. 11.1STQ Ch. 3 - Prob. 11.2STQ Ch. 3 - Prob. 12.1STQ Ch. 3 - Prob. 12.2STQ Ch. 3 - Prob. 12.3STQ Ch. 3 - Prob. 13.1STQ Ch. 3 - Prob. 13.2STQ Ch. 3 - Prob. 13.3STQ Ch. 3 - Prob. 13.4STQ Ch. 3 - Prob. 14.1STQ Ch. 3 - Prob. 14.2STQ Ch. 3 - Prob. 14.3STQ Ch. 3 - Prob. 15.1STQ Ch. 3 - Prob. 15.2STQ Ch. 3 - Prob. 16.1STQ Ch. 3 - Prob. 16.2STQ Ch. 3 - Prob. 3.1Q Ch. 3 - Prob. 3.2Q Ch. 3 - Prob. 3.3Q Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Prob. 3.6Q Ch. 3 - Prob. 3.7Q Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Prob. 3.1P Ch. 3 - Prob. 3.2P Ch. 3 - Prob. 3.3P Ch. 3 - Prob. 3.4P Ch. 3 - Prob. 3.5P Ch. 3 - Prob. 3.6P Ch. 3 - Prob. 3.7P Ch. 3 - Prob. 3.8P Ch. 3 - Prob. 3.9P

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:9780357110362
Author:Murphy
Publisher:CENGAGE L
SWFT Comprehensive Vol 2020
Accounting
ISBN:9780357391723
Author:Maloney
Publisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College

Text book image

College Accounting, Chapters 1-27

Accounting

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:Cengage Learning,

Text book image

Cornerstones of Financial Accounting

Accounting

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Cengage Learning

Text book image

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:9781337514835

Author:MOYER

Publisher:CENGAGE LEARNING - CONSIGNMENT

Text book image

CONCEPTS IN FED.TAX., 2020-W/ACCESS

Accounting

ISBN:9780357110362

Author:Murphy

Publisher:CENGAGE L

Text book image

SWFT Comprehensive Vol 2020

Accounting

ISBN:9780357391723

Author:Maloney

Publisher:Cengage

Text book image

Principles of Accounting Volume 1

Accounting

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax College

SEE MORE TEXTBOOKS