In: Finance
Cash disbursements may include all of the following EXCEPT
rent payments. |
short-term loan payments. |
tax payments. |
depreciation expense. |
Solution :
Cash Disbursements is the outflow of cash to meet an expense or obligation which is due for payment.
Rent payments : Rent payments involve outflow of cash to pay rent expenses. Hence, it is a Cash Disbursement.
Short - term loan payments : Short term loan payment involve outflow of cash to meet short term loan payments due, if any. Hence, it is a Cash Disbursement.
Tax Payments : Payment of tax involves outflow of cash to meet tax expense or payments due. Hence, it is a Cash Disbursement.
Depreciation Expense : Depreciation expense is an expense that does not involve outflow of cash. It is a systematic allocation of a cost of an asset over its useful life and it treated as a reduction from the Net Income from the Income Statement. It is not an expense which is due for payment, hence there is no outflow of cash. Thus, it is a not a Cash Disbursement.
Thus Cash Disbursements involve Rent Payments, Short Term Loan Payments, Tax Payments but not Depreciation Expense.
Thus Depreciation Expense is not a Cash Disbursement.
The Solution is Option 4 : Depreciation Expense