BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -A company needs to set aside a certain amount of wear and tear if it buys any machinery or asset. And that expense is recorded every year in the company’s income statement. This expense is called depreciation, and it is a non-cash expense. As mentioned earlier, depreciation is a non-cash expense.

Detailed explanation-2: -A non-cash charge is a write-down or accounting expense that does not involve a cash payment. Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows.

Detailed explanation-3: -Depreciation means fall in the value of assets. The net result of an asset’s depreciation is that sooner or later the asset will become useless. Depreciation does not result in outflow of cash and hence, it is a non-cash expenses.

Detailed explanation-4: -Non-cash charges can include expenses such as depreciation, amortization, and depletion. Since non-cash charges are still included as expenses, they will be accounted for as deductions in the income statement and lower overall earnings.