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Unformatted text preview: Evan DAgostino September 26, 2007 Principles of Finance ID#106003714 2. Market value is what the value of an asset or stock is on the open market. Book value = net worth of the firm = shareholder's equity = ASSETS LIABILITIES. Book value is better for firms with liquid assets (banks) or hard, traditional assets (steel companies). 3. Depreciation does not generate cash flow. If a million dollar piece of equipment is purchased, an accountant would reflect that the company now owns a million dollar asset. Without depreciation, the company would still show a million dollar asset on the books even though we all know the equipment's value is decreasing. As such, the company's value would be overstated in the books. http://wiki.answers.com/Q/Does_depreciation_generate_actual_cash_flow_in_a_company_and_if_so_ho w 4. The difference between depreciation expense and accumulated depreciation is that depreciation expense is for a specified time period. Accumulated depreciation reflects how much depreciation expense expense is for a specified time period....
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