![]() I found this, "Even though depreciation is a legitimate expense and must be recognized, it is not a cash outlay. An excerpt from another site to contextualise my question. No one has satisfactorily explained why depreciation is added to profit in the cash flow statement. Hope I explained this in an understandable form. Depreciation affects profit/loss numbers, but not cash (the capital expense, however, does). So, you started with $60K, but bought the truck (leaving you with $0), then brought in $100K in revenue, while paying out $50K in labour (leaving you $50K in the bank). Note that there was a capital expenditure which "burned" the $60K you started the year with. (In other words, you didn't spend $20K out of the net new $50K added to the checking account over the year.) So, to recognize the $50K as "Cash from Operations", you have to add that $20K back to the net profit to balance to that $50K in cash received. But while depreciation is an expense, it is not a cash expense. Your profit was $30K ($100K - $50K - $20K), so that cash comes in. In the cash flow, however, you are essentially spinning this around to focus on the cash side. The table at the top is a very simplified income statement, so the depreciation expenses would reduce your operating profit. To learn more about relationship-based ads, online behavioral advertising and our privacy practices, please review Bank of America Online Privacy Notice and our Online Privacy FAQs.I was momentarily taken aback as well, and then suddenly remembered that it was a cash flow statement, not and income statement I was looking at. These ads are based on your specific account relationships with us. In addition, financial advisors/Client Managers may continue to use information collected online to provide product and service information in accordance with account agreements.Īlso, if you opt out of online behavioral advertising, you may still see ads when you log in to your account, for example through Online Banking or MyMerrill. If you opt out, though, you may still receive generic advertising. If you prefer that we do not use this information, you may opt out of online behavioral advertising. This information may be used to deliver advertising on our Sites and offline (for example, by phone, email and direct mail) that's customized to meet specific interests you may have. Here's how it works: We gather information about your online activities, such as the searches you conduct on our Sites and the pages you visit. Relationship-based ads and online behavioral advertising help us do that. We strive to provide you with information about products and services you might find interesting and useful. MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC layer, and a wholly owned subsidiary of BofA Corp.īanking products are provided by Bank of America, N.A., and affiliated banks, Members FDIC, and wholly owned subsidiaries of BofA Corp. Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). When you visit these sites, you are agreeing to all of their terms of use, including their privacy and security policies.Ĭredit cards, credit lines and loans are subject to credit approval and creditworthiness. Bank of America has not been involved in the preparation of the content supplied at unaffiliated sites and does not guarantee or assume any responsibility for their content. Not all materials on Small Business Resources will be available in Spanish.Ĭertain links may direct you away from Bank of America to unaffiliated sites. Bank of America does not deliver and is not responsible for the products, services or performance of any third party. All third party trademarks, service marks, trade names and logos referenced in this material are the property of their respective owners. ![]() Bank of America does not warrant or guarantee the accuracy, reliability, completeness, usefulness, non-infringement of intellectual property rights, or quality of any content, regardless of who originates that content, and disclaims the same to the extent allowable by law. The content on Small Business Resources (including, without limitations, third party and any Bank of America content) is provided “as is” and carries no express or implied warranties, or promise or guaranty of success. Any informational materials provided are for your discussion or review purposes only. Consult your own legal and/or tax advisors before making any financial decisions. Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. ![]()
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