Which of the following does not result in outflow of cash?

(A) Depreciation

(B) Loss on sale of fixed assets

(C) Purchase of fixed assets

(D) Goodwill written off

Choose the correct answer from the options given below:

Looking at each item to identify which does not result in cash outflow:

(A) Depreciation - This is a non-cash expense used to allocate the cost of fixed assets over their useful life through accounting entries. No actual cash leaves the business when depreciation is recorded.

(B) Loss on sale of fixed assets - This represents the difference between the book value and selling price of an asset. The loss itself is merely an accounting adjustment and does not cause any cash to flow out. The only cash flow is the cash received from the sale (which is an inflow).

(C) Purchase of fixed assets - This clearly results in cash outflow as payment must be made to acquire the asset.

(D) Goodwill written off - This is an accounting entry to reduce the value of goodwill in the books. It is a non-cash expense and no actual cash flows out of the business.

Items (A), (B), and (D) are all non-cash items that appear in the profit and loss account but do not involve actual movement of cash. Only item (C) involves actual cash outflow.

Therefore, items that do not result in cash outflow are (A), (B) and (D) only.

Correct Answer: Option 2