Non-cash Items :- Expenses in financial accounting are expenses in the current period for which there is no corresponding change in the cash or payables accounts.
A couple of examples:
1. Depreciation. Capital assets are expensed over the life of the asset. For each accounting period, there is an expense recorded, but no payment made.
2. Amortization. For example, A company issued bonds at a price below 100. At maturity, it would have to pay back more for the principal portion than it received at the time the bonds were issued. Since this difference is not a repayment of money actually received, it is considered interest. Interest occurs over time, so the difference is amortized over the life of the bond, which is an expense recorded for each accounting period, but no cash payments are made.
Non Operating Items:- Cash flows (inflows and outflows) that are not related to the day-to-day, ongoing operations of a business. Non-operating cash flows include borrowings, the issuance or purchase of stock, asset sales, dividend payments, and other investment activity. On most company balance sheets, total cash flows will be broken down into operating cash flows, investing cash flows, and financing cash flows, with the latter two making up non-operating cash flows.
Regards,
RAJESH CHOUDHARY
CAclubindia
