Federal Nursing Home Administrator Practice Exam

Which of the following is NOT considered a cash expense?

1. Depreciation

2. Utilities

3. Payroll

4. Supplies

The correct answer is: Depreciation

Depreciation is identified as the correct answer because it represents a non-cash expense. This means that while depreciation affects the accounting profitability of a business, it does not involve an actual outflow of cash during the accounting period. Instead, it is an allocation of the cost of tangible assets over their useful lives. In contrast, utilities, payroll, and supplies are all cash expenses that require actual cash payments to be made. Utilities require regular payments for services such as electricity and water; payroll involves cash disbursements to employees for their work; and supplies involve purchasing items needed for the operation of the facility, which typically requires immediate cash outlay.