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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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