What is a Noncash Item

A noncash item is a negotiable item (e.g., check or bank draft) deposited into a customer's account but not credited until it clears the issuer's account. A noncash item may also be an item on an income statement (e.g., donation, capital depreciation, investment gains or losses) that does not affect cash flow.

BREAKING DOWN Noncash Item

Banks will often put a hold of up to several days on a large noncash item, such as a check, depending on the customer's account history and what is known about the payor (e.g., if the issuing organization has the financial means to cover the check presented). The short period of time during which both banks have the funds available to them (between when the check is presented and the money is withdrawn from the payor's account) is called the float.

In accounting, the income statement may include non-cash items that affect the bottom line. Depreciation and amortization, for example, are expenses that reduce taxable income, but no cash is expended and so they do not affect the cash flow statement.