Question

Why depreciation a non-cash expense?? Explain ​

Answer 1

Dear Student,

Depreciation is an expense charged off over the life of the assets for the normal wear & tear due to its usage for production/business use.
It is charged each year from the profit, but nothing in sort of cash is paid/incurred.
It is just that cost of the asset is being split /amortised over its useful life & that is the reason Depreciation is a non-cash expense as the actual cost of the asset has already been paid in the past.

Regards,