In cash flow estimation, depreciation is considered as________________?
Correct answer: B. Non cash charge
- A. Cash charge
- B. Non cash charge
- C. Cash flow discounts
- D. Net salvage discount
Explanation
Depreciation reduces reported accounting profit but does not involve a current cash payment. It is therefore added back in cash-flow estimation as a non-cash charge.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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