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i have read, and also have been taught by my teachers that DEPRECIATION is a NON PAID EXPENSE , but yet didnt found any reliable answer, Thanks M.Shoaib Khalid
Depreciation is a noncash expense in the sense that it reduces the value of an asset due to wear & tear or obsolescence, although, technically, the asset itself was purchased upon payment of cash. But, since the asset can be used for more than one accounting period, it is just and acceptable to divide the expense according to usage or its life instead of a one-time outright expense; thus, the proper matching of expense with the revenue (Matching Principle)
it means we can't say it as a NON_CASH expense.... ?
Entry 1
ASSET 1000
CASH 1000
Depreciation Exp. 500
Accumulated Dep. 500
Depreciation Exp. 500
Accumulated Dep. 500
Where are the cash entries? Nothing to do with depreciation, only with the initial purchasing of the asset.
