What is one key benefit of accelerated depreciation for businesses?

Accelerated depreciation allows businesses to write off a higher portion of an asset's cost in the earlier years of its useful life. This leads to larger deductions on tax returns during those initial years, which in turn reduces taxable income. As a result, businesses experience increased cash flow management because they can retain more of their income due to lower tax liabilities. This can provide companies with greater liquidity to invest in operations, manage expenses, or reinvest in growth during crucial early years, making it an essential tool in financial strategy.

Other options don't capture the primary function of accelerated depreciation. For instance, while improved net income might sound appealing, accelerated depreciation typically leads to lower net income in the earlier years, not an increase. Similarly, while better asset tracking can be beneficial, it is not a direct advantage of using accelerated depreciation. Lastly, while maintaining longer asset life is important, accelerated depreciation does not influence the physical lifespan of assets but rather affects their financial representation on the balance sheet.