Noncash expense definition

What is a Noncash Expense?

A noncash expense is an expense for which there is no related cash outflow in the same period. In addition, an accrued expense may be recorded for which the related cash expenditure is in the following period.

Examples of Noncash Expenses

The most common examples of noncash expenses are depreciation and amortization; for these items, the cash outflow occurred when a tangible asset or intangible asset was initially acquired, while the related expenses are recognized months or years later. 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. An unrealized gain or unrealized loss is also considered a noncash expense.