Depreciation: Impact on Financial Statements

• It has no impact on the financial statements
• It decreases the cash flow from operating activities
• It decreases the total assets (correct)
• It increases the net income

• The increase in the value of an asset over time
• The decrease in the value of an asset over time due to wear and tear, obsolescence, or other similar factors (correct)
• The process of setting aside money to replace an asset at the end of its useful life
• The process of liquidating an asset to generate cash flow

• Because it directly reduces the company's cash reserves
• Because it increases the company's cash balance
• Because it involves actual cash outflows
• Because it doesn't impact the cash flows of a company (correct)