Respond to - Depreciation is a non-cash expense in which it pertains to the value of a fixed asset over its 'useful' years; it does not affect cash flows. It is listed in a budget as the reduction from business expenses. In that same token, depreciation does affect the cash flow with a non-direct structure. With companies, they use depreciation in order to lower their amount of taxes due to the government. In that note, it does affect the amount of cash that is leaving the company via taxes. In terms of an accelerated depreciation, it allows the company to claim the increased amount of depreciation as a taxable expense. It affects the cash flow by lowering their taxes even further. This system is much useful when the company is just starting out and new, since it does need that additional cashflow in their early year of development. When I company decides to purchase an asset for its use, there is a continuous outflow of payments that are needed in order to pay for it. With that, depreciation does lessen the cash flow b/c it does allow the company to offset the outflow of cash by deducting depreciation from their