Noncash expense

A noncash expense is an expense for which there is no related cash outflow in the same period. The most common examples of noncash expenses are depreciation and amortization; for these items, the cash outflow occurred when a tangible or intangible asset was initially acquired, while the related expenses are recognized months or years later. In addition, an accrued expense may be recorded for which the related cash expenditure is in the following period. Another example is expenses related to reserves; for example, a warranty expense is recognized in the current period in order to increase a reserve for product returns, but the actual cash outflow related to paying back a customer may not occur for several months.