If Depreciation is a non-cash expense, why does it affect the cash balance? Depecciation is not tax deductible so we must recognize it Although depreciation is a noncash expense you still had to pay for the asset in a previous year Although Depreciation is a non-cash expense, it is tax-deductible Because depreciation is actually a cash expense Why is the Income Statement not affected by changes in Inventory? the expense is only recorded when the goods associated with it are sold Inventory is a non-cash expense This is incorrect Working Capital changes show up on the income Statement. Inventoryis not tax defluetible Walk me through how Depreciation going up by $10 would affect the income statement assuming a 40% Tax Rate? Net Income goes down by 6 The 10 dollars in depreciation gets added back Cash is up by 4 Retained earnings is down by 6