“Non-cash adjustment” means two completely different things depending on where you met it — a financial statement or a restaurant receipt. Both, honestly:
Meaning 1 — accounting: the cash flow statement’s translator
Non-cash adjustments convert net income into actual cash flow by removing income-statement items that never touched cash: depreciation and amortization added back, gains/losses on asset sales reversed, impairments, stock-based compensation.
Depreciation is the classic: a real expense, zero cash movement this period, so the cash flow statement adds it back. That’s why profitable companies can be cash-poor and vice versa — and why the operating cash flow section reads like net income plus a list of apologies. (The full three-statement choreography of one depreciation dollar is its own classic question — we walk it here.)
Meaning 2 — the receipt: a card surcharge in costume
On a bill, “non-cash adjustment” is pricing language: the menu price is the cash price, and card payers see an added percentage — the reversed framing of a “cash discount.” Card-network rules and several jurisdictions regulate how surcharges must be disclosed and capped, and the framing exists partly to navigate exactly those rules. As a consumer: it’s legal in many places when disclosed, it’s negotiable nowhere, and paying cash removes it. As a business owner considering one: disclosure rules are specific — signage and receipt language matter — so check your card agreements and local rules before copying a competitor’s sticker.
FAQ
What is a non-cash adjustment in accounting? An add-back or reversal on the cash flow statement for items that affected net income without moving cash — depreciation, amortization, impairments, gains and losses on sales.
Why is depreciation added back to net income? It reduced profit but consumed no cash this period — adding it back converts accrual income toward actual cash flow.
What is a non-cash adjustment on a restaurant receipt? A card surcharge framed against a cash price — the menu shows the cash price and card payments carry an added percentage.
Are card surcharges legal? Often, with disclosure requirements and caps that vary by card network and jurisdiction — the framing and signage rules are specific.