Depreciation is reported as an expense on the firm's income statement,but it does not involve any actual cash.

Question

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Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. It is reported as an expense on the income statement, reducing the company's taxable income, but does not involve any actual cash outflow since it's merely an allocation of a past expenditure.

Depreciation Is Reported as an Expense on the Firm's Income