FIN 571 Week 2 DQ 3 -
"There are several noncash items that are expenses against revenues but do not affect cash flow. The most important of these is depreciation." Ross, Westerfield, Jaffe and Jordan (2016). Over the years, I've observed that depreciation from a financial accounting perspective is probably one of the most misunderstood concepts. First, without using the proverbial "driving a new car off of the lot" example, briefly explain depreciation from a financial accounting perspective. Then it should be easier to explain what the authors mean regarding a noncash expense item.
Hint: You may also want to avoid using cell phones, stereos, clothing, etc from a consumer perspective, think from a business perspective.