State the effect on profit and cash of depreciating a non-current asset.

Name: State the effect on profit and cash of depreciating a non-current asset.
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Question

Quizplus · Accepted Answer

Depreciation is a non-cash expense, meaning it does not affect the actual cash balance of the business. However, it does reduce the reported profit of the business, as it is subtracted as an expense on the income statement. Therefore, the correct answer is that depreciating a non-current asset will result in a decrease in profit and no effect on cash.

State the Effect on Profit and Cash of Depreciating a Non-Current