Question about depreciation on fixed costs

hztm
hztm Registered Posts: 50 ? ? ?
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.

Comments

  • mge
    mge Registered Posts: 94 ? ? ?
    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
    hztm Registered Posts: 50 ? ? ?
    Thank you for confirming this.
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