CA Foundation Exam > CA Foundation Questions > When Fixed assets are sold:a)Total assets wil...
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When Fixed assets are sold:
- a)Total assets will increase
- b)Total liabilities will increase
- c)Total assets will decrease
- d)There is no change in total assets
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
When Fixed assets are sold:a)Total assets will increaseb)Total liabili...
Explanation:
When fixed assets are sold, there is no change in the total assets of the company. This is because the fixed asset account is reduced by the amount of the sale, and the cash account is increased by the same amount. The net effect on the balance sheet is zero.
The sale of fixed assets does not affect the total liabilities of the company either. Liabilities are obligations that the company owes to others, such as loans, accounts payable, and accrued expenses. Selling fixed assets does not change these obligations.
Therefore, the correct answer is option 'D'.
In summary, when fixed assets are sold:
- Total assets do not increase or decrease
- Total liabilities do not increase or decrease
- The fixed asset account is reduced by the amount of the sale
- The cash account is increased by the same amount
- The net effect on the balance sheet is zero
When fixed assets are sold, there is no change in the total assets of the company. This is because the fixed asset account is reduced by the amount of the sale, and the cash account is increased by the same amount. The net effect on the balance sheet is zero.
The sale of fixed assets does not affect the total liabilities of the company either. Liabilities are obligations that the company owes to others, such as loans, accounts payable, and accrued expenses. Selling fixed assets does not change these obligations.
Therefore, the correct answer is option 'D'.
In summary, when fixed assets are sold:
- Total assets do not increase or decrease
- Total liabilities do not increase or decrease
- The fixed asset account is reduced by the amount of the sale
- The cash account is increased by the same amount
- The net effect on the balance sheet is zero
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Community Answer
When Fixed assets are sold:a)Total assets will increaseb)Total liabili...
If you sold fixed assests like machine,land,building then you will receive cash (cash is also an asset)
decrease assets by selling it and increase asset by receive cash. therefore no change in total assets
decrease assets by selling it and increase asset by receive cash. therefore no change in total assets
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When Fixed assets are sold:a)Total assets will increaseb)Total liabilities will increasec)Total assets will decreased)There is no change in total assetsCorrect answer is option 'D'. Can you explain this answer?
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