Depreciation is usually NOT considered an operating cash flow in capital budgeting because ________.
A) depreciation is usually a constant amount each year over the life of the capital investment
B) deducting depreciation from operating cash flows would be counting the lump-sum amount twice
C) depreciation usually does not result in an increase in working capital
D) depreciation usually has no effect on the disposal price of the machine

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense and is already factored into the calculation of net income, which is used to determine operating cash flows. Deducting depreciation again would result in counting the lump-sum amount twice.

Depreciation Is Usually NOT Considered an Operating Cash Flow in Capital