A Ltd sold a car for $75 000 which it had recorded in its accounts at $60 000. The effect on A Ltd's accounts is: AssetsLiabilities Equity
A) increase no change increase
B) decrease decrease increase
C) increase no change no change
D) no change decrease no change

Question

Quizplus · Accepted Answer

The sale of the car for a higher amount than what it was recorded in the accounts will result in an increase in assets (cash received) and an increase in equity (profit made on the sale). There will be no change in liabilities as the sale of the car does not affect any outstanding debts or obligations.

A Ltd Sold a Car for $75 000 Which It