Question about depreciation on fixed costs

hztm

Hi, I am studying for the Unit 15 assessment !! Just wondered if somebody could confirm that I am accounting for depreciation correctly - I am told that fixed costs are £20,000 per month and that budgeted depreciation included in fixed costs is £2000 per month. I am correct in saying that the actual figure to include in the cash flow would be the budgeted fixed costs less the depreciation ( in this case £18,000 ). Thank you very much for your assistance.

mge

Yes, I would agree that the figure to be included in the cash flow should be £18,000.

Depreciation is just a book entry and does not involve any receipt or payment of cash.

All the other fixed costs are likely to involve cash/bank payments, so would be included in the cash flow.

hztm

Thank you for confirming this.