estimate the cash flow from operations, depreciation must be added back to net income because it is a non-cash charge that has been deducted from revenue.

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Quizplus · Accepted Answer

Depreciation is a non-cash expense that reduces net income, but it does not actually require an outflow of cash. Therefore, when estimating cash flows from operations, depreciation is added back to net income to account for this non-cash expense.

Estimate the Cash Flow from Operations, Depreciation Must Be Added