depreciation overview

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6 Terms

1
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depreciation

allocates the cost of tangible assets over their useful lives

2
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book value

original cost - accumulated depreciation

the value of an asset recorded on companies accounting books after accounting for depreciation

3
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how depreciation effects income statement

depreciation expense reduces net income

4
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how depreciation effects balance sheet

accumulated depreciation lowers asset book value

5
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how depreciation effects cash flow

non cash expense added back to operations

6
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Long term debt

debt that last more than a year

  • when u take out a long term debt u create a credit to long term debt and create debit to cash

  • provides financial flexibility but adds financial risk