Fixed Asset Accountant Mock Interview
Master 30 Fixed Asset Accountant interview questions covering depreciation, capitalization policies, and reconciliations.
Question 8 of 30
Why is depreciation expense considered a non-cash expense?
How to Answer
Example Answer
Community Answers
Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
This is a technical question that tests whether you are able to explain why depreciation expense is considered non-cash. The reason is that when a fixed asset is purchased, the cash outflow occurs at that time. However, depreciation expense is recognized over the useful life of the asset.
Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
"Depreciation expense is the most common non-cash expense. The reason it is considered non-cash is because the cash outflow occurs up front when the asset is purchased. However, depreciation expense is recognized over the useful life of the asset to comply with accrual accounting principles. On the Statement of Cash Flows, depreciation expense is an add-back to net income to recognize the fact that it is non-cash."
Write Your Answer
0 - Character Count
Unlock All 30 Fixed Asset Accountant Questions
Unlock expert responses to technical accounting questions that assess your fixed asset expertise.
Get StartedJump to Question