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      Question

      Which item is recorded as a non-cash

      transaction?
      A Depreciation expense charged to P&L Correct Answer Incorrect Answer
      B Cash paid for inventory Correct Answer Incorrect Answer
      C Cash received from sale of investments Correct Answer Incorrect Answer
      D Bank overdraft repayment in cash Correct Answer Incorrect Answer

      Solution

      Depreciation is an accounting entry that reduces profit but does not involve any cash outflow; it is a non-cash expense.

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