Why does the cost of operations not include depreciation and amortization?

Because. 1. Operating cost is a concept in the financial management category of enterprises, and the essence of this concept is the cost of "cash payment" of production and operation, and non-cash cost expenses are not included in this concept. Therefore, depreciation and amortization are not "cash-out" costs and expenses, so they certainly cannot be included.

2. In the enterprise project evaluation system, there is a premise assumption, that is, the funds required for each project invested by the enterprise are all the company's own funds, so that the objective evaluation of each project can be made fairly and justly, that is, its own funds, there will be no interest expense, so this interest expense will not be included.

3. In financial management, in order to reflect the net cash flow that the project itself can bring to the enterprise, that is, the ability and feasibility of the project itself, there is an important assumption, that is, all funds are owned, and there is no borrowing or financing. Financial costs as extrinsic factors are excluded.

Extended information: 1. It refers to the costs incurred by the enterprise in engaging in its main business activities. Real estate development business costs include:

The cost of land transfer, the cost of sales of commercial housing, the cost of sales of supporting facilities, the settlement cost of construction projects, the operating cost of rental products, etc. If it is a sale, office expenses should of course be included in the cost of sales, and the sum of these items should be entered into the operating cost in installments or all at once. Composition of operating costs.

2. Operating costs are directly related to operating income, and the vesting period and various direct expenses of the vesting object have been determined. Operating costs mainly include the cost of main business and other business costs. The operating costs of selling products, commodities and providing services are formed by the costs of production and operation.

The composition of the production cost (also known as the manufacturing cost) of the product of an industrial enterprise mainly includes:

1.Direct material.

Direct materials include raw materials, auxiliary materials, spare parts, purchased semi-finished products, fuels, power, packaging materials and other direct materials that are actually consumed in the production and operation process of the enterprise and directly used in the production of products, and constitute the product entity.

2.Direct wages.

Direct wages include the salaries, bonuses, allowances and subsidies of the personnel directly engaged in the production of products by the enterprise.

3.Other direct expenses.

Other direct expenses include employee welfare expenses for personnel directly engaged in the production of products.

4.Manufacturing costs.

Enterprises can make appropriate adjustments to the cost components according to their own needs.

The reasons why depreciation expense and interest expense on fixed assets are not included in operating costs are:

The depreciation expense of fixed assets is the cash transfer of fixed asset investment within the project system, which has been included in the cash flow statement as cash outflow in the fixed asset investment estimation, and cannot be double-counted in the cost;

Net interest expense does not need to be covered by investments in net working capital. Essentially, it is a portion of the profit, and when analyzing the profitability of a project, the net interest expense is deducted from the total cost.

It is to avoid overestimating the net working capital requirements and cash outflows and underestimating the project's benefits. Moreover, as far as the composition of the cash flow statement itself is concerned, since the cash flow statement of its own funds has a special item for interest, there is no need to include net interest expenses in the cost item.

Hello, parsing:

Operating costs. It is a concept in the field of enterprise financial management, and the essence of this concept is production and operation.

The cost of "cash payment", non-cash cost expenses are not included in this concept. Therefore, depreciation and amortization are not "cash-out" costs and expenses, so they certainly cannot be included.

In the enterprise project evaluation system, there is a premise assumption, that is, the funds required for each project invested by the enterprise are all the enterprise's own funds.

In this way, we can make an objective evaluation of each project fairly and impartially, that is, our own funds, which will not have interest expenses, so this interest expense will not be included.

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Because operating cost is a specific concept used in project evaluation, as the main cash outflow during the operation period of the project, the essence is the cost of "cash payment" of production and operation, and depreciation and amortization are not the costs and expenses of "cash payment", so it is not included.

Operating cost is a part of the cost of operating that is separated from the total cost of the product for analysis in technical economics, and is the actual cash expenditure incurred due to the production and sale of products and the provision of services in a certain period of time (usually one year). It does not include expense items that are included in the cost of the product, but do not actually incur cash expenditures.

Operating costs, as long as they refer to the main and hidden operating costs and other business costs, depreciation and amortization expenses are not costs, but are the company's non-cash costs, which affect cash flow, and interest expenses are subject to the situation.

Operating Costs in the Engineering Economy:

1. Operating cost is a specific concept used in project evaluation, as the main cash outflow during the project operation period, its composition and estimation can be expressed in the following formula:

2. The cost of camping = purchased raw materials, fuel and power + wages and benefits + repair + other expenses.

3. In the formula, other expenses refer to the rest of the expenses after deducting depreciation, amortization, repair, wages and welfare expenses from manufacturing expenses, management expenses and sales expenses.

Summary. Hello, I am glad to answer for you, according to the relevant information, why the depreciation expense and amortization expense in the total cost can be repaid: "Because depreciation and amortization are the expenses of the long-term assets purchased in the current period, and the long-term assets in the previous purchase period have been cashed.

There is no actual cash outflow of principal, but depreciation and amortization will lead to a decrease in principal profit, which is equivalent to retaining a portion of cash in addition to profits, which can be used to invest long-term assets, repay loans, interest, and so on. Depreciation and amortization can be incorporated into the cost expense, which can reduce the income tax payable. This is due to the fact that income tax is paid less, resulting in a reduction in cash outflow, which is what is commonly referred to as depreciation tax credit.

As a result, the cash saved by reducing cash outflows can be used to repay loans. "I hope mine can help you!

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Hello, the big orange core is happy to answer for you, according to the relevant information query, the total cost of depreciation and amortization expenses can be repaid as follows: "Because depreciation and amortization are the expenses of the long-term assets purchased in the current period, and the long-term assets in the previous purchase period have been cashed. There is no cash outflow from the principal, but depreciation and amortization will lead to a decrease in the principal profit, which is equivalent to retaining a part of the cash in addition to the profit, which can be used to invest in long-term assets, repay loans, interest, etc.

Depreciation and amortization can be incorporated into the cost expense, which can reduce the income tax payable. This is due to the fact that income tax is paid less, resulting in a reduction in cash outflow, which is what is commonly referred to as depreciation tax credit. As a result, the cash saved by reducing cash outflows can be used to repay loans.

"I hope mine can help you!

Hello! So the maximum ability to repay the principal is unprofit + depreciation + amortization, why not include interest?

Why can this fund only be repaid?

The repayment of principal is because net profit + depreciation + amortization is the net cash flow of the enterprise, which can be used to repay the principal, and the interest has been deducted before the net profit is deducted and rolled over, and there is no need to repeat the deduction, otherwise it can be expressed as net profit + depreciation + amortization + interest to repay the principal and interest.

Got it, thanks! <>

You are welcome.

Depreciation expenses can be included in the "cost of main business".

The cost of main business refers to the cost incurred by an enterprise in its business activities such as selling goods and providing labor services. Generally, when an enterprise recognizes the income from its main business such as the sale of goods and the provision of labor services, it transfers the cost of the goods sold and the services provided to the cost of the main business. Advertising companies use computers, cars and other equipment when providing services such as advertising design and negotiation with Party A, so this depreciation expense is the cost incurred by the advertising company in carrying out business activities.

Depreciation. It can be included in the "cost of main business".

The cost of main business refers to the cost incurred by the enterprise in its business activities such as selling goods and providing labor services. Enterprises generally recognize the income from their main business such as the sale of goods and the provision of labor services.

, the cost of goods sold and services provided will be transferred to the cost of main business. Advertising agencies provide advertising design, and Party A.

Computers, cars, and other equipment are used for negotiations and other services, so this depreciation expense is the cost incurred by the advertising company in carrying out business activities.

Extended Information:1Depreciation expense is the value of fixed assets transferred to the cost of products due to wear and tear in the process of use, fixed assets in their effective use period, always maintain a complete physical form, but due to wear and tear (tangible loss) and the development of science and technology (intangible loss), the value of fixed assets gradually decreases, in order to ensure the reproduction of fixed assets in kind, the wear and tear value of fixed assets due to use is used in the form of depreciation expense, as a period expense.

Compensation from product sales revenue forms a kind of preparation for the renewal and transformation of fixed assets. The size of the depreciation expense for each period depends on three factors: (1) the original value of the fixed assets; (2) the difference between the income from the sale of fixed assets after the scrapping of fixed assets after deducting the liquidation fee; (3) The estimated service life of fixed assets.

The calculation methods of depreciation expense mainly include the straight-line method, the declining balance method, the sum of life method, the annuity method and the debt service method. Financial Accounting in the West.

, Depreciation expense, as an asset account, records the depreciation expense calculated according to the selected depreciation method that should be matched to the current income.

2.How depreciation expense is calculated.

1. The service life method is also known as the straight line method. It is a method of apportioning the value of fixed assets on an average basis over their expected useful life. If this method is based on the abscissa of time and the amount as the ordinate, the accumulated depreciation amount is graphically presented as a rising straight line, so it is called the "straight line method".

2. Workload method: refers to the depreciation of fixed assets according to the total workload (total working hours, total workbench shifts, total mileage, etc.).

One of the methods. This method is applied to the depreciation calculation of certain production equipment and transportation equipment that are of great value, but are not used frequently, or have large production variations, and wear and tear is uneven. Depending on the purpose and characteristics of the equipment, depreciation can be calculated according to different methods such as working hours, bench shifts or mileage.

3. Accelerated depreciation method.

1) Sum of service life figures: Also known as the total number of years method or the proportion of years method, it refers to the ratio of the total accrued depreciation multiplied by the remaining available years (including the calculation year) and the sum of all the figures of the usable years, as the depreciation expense of a certain year.

2) Double declining balance method.

It refers to the depreciation amount of each year calculated according to the depreciation value of fixed assets at the beginning of each year and the straight-line depreciation rate of double without considering the residual value.

1) When doing project costs, depreciation expenses and amortization expenses should be included, but these two items should be first collected in the "manufacturing expenses", carried forward to the production cost account at the end of the month, and distributed among different products and finished products in a certain proportion.

2) In project costing, depreciation and amortization expenses are generally fixed expenses.

Hello, parsing:

Operating cost is a concept in the financial management category of enterprises, and the essence of this concept is the cost of "cash payment" of production and operation, and non-cash cost expenses are not included in this concept. Therefore, depreciation and amortization are not "cash-out" costs and expenses, so they certainly cannot be included.

In the enterprise project evaluation system, there is a premise assumption, that is, the funds required for each project invested by the enterprise are all the company's own funds, so that the objective evaluation of each project can be made fairly and justly, that is, its own funds, there will be no interest expense, so this interest expense will not be included.

If you still have questions, you can continue to ask me questions by "hi"!

The depreciation of hotel room-level related equipment can be directly included in the cost of the main business, and the fixed assets of the operating lease are the main business of the enterprise, and the depreciation of its assets can be directly entered into the cost of the main business.

For transportation enterprises, the depreciation of means of transportation shall first be included in the labor cost, and the fixed assets transferred to the main business cost after the end of the month shall be depreciated on a monthly basis and recorded in the labor cost.

The underlying asset or current profit or loss depends on the purpose. For fixed assets used in the basic production workshop, depreciation should be recorded in the cost of manufacturing and ultimately included in the cost of the product produced.

Commissions paid to marketers, office expenses, depreciation expenses, utilities, staff salaries, welfare expenses, travel expenses, transportation expenses, communication expenses, and other costs directly related to the main business of the business department.