State with reasons, whether the following statement is true or false.Depreciation is a non-cash expense and does not result in any cash outflow. (2024)

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Correct option is A. True
Depreciation is considered a non-cash expense, since it is simply an ongoing charge to the carrying amount of a fixed asset, designed to reduce the recorded cost of the asset over its useful life.

Depreciation is found on the income statement, balance sheet, and cash flow statement. Depreciation can be somewhat arbitrary which causes the value of assets to be based on the best estimate in most cases. Ultimately, depreciation does not negatively affect the operating cash flow of the business.

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State with reasons, whether the following statement is true or false.Depreciation is a non-cash expense and does not result in any cash outflow. (2024)
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