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

When non-current assets are depreciated, the value of the asset on the balance sheet decreases, which in turn leads to a decrease in profit, as depreciation is considered an expense. However, since depreciation is a non-cash expense, there is no immediate effect on the cash balance. Therefore, the answer is a decrease in profit but no effect on cash.

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