What impact does depreciation have on the cash account?
A) Depreciation has no impact on the cash account.
B) Depreciation results in a decrease to cash.
C) Depreciation results in an increase to cash.
D) Depreciation only impacts the cash account if inflation has occurred.

Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense that is used to allocate the cost of a long-term asset over its useful life. As such, it does not impact the cash account directly. However, it does impact the net income of a company, which can indirectly impact the amount of cash available.

What Impact Does Depreciation Have on the Cash Account