Practicing Success
Which one of following is not a non-cash item? |
Provision for bad debts Goodwill written off Depreciation Cash sales |
Cash sales |
The correct answer is option 4- Cash sales. Cash sales represent actual cash transactions where goods or services are sold and cash is received immediately. Therefore, cash sales are not considered non-cash items. They are operating activity of the company. In contrast, "Provision for bad debts," "Goodwill written off," and "Depreciation" are all non-cash items. They are adjustments made in the financial statements to account for estimated losses, impairment, or the allocation of the cost of assets over their useful lives, respectively. |