Sale of an asset at a loss will affect which activities?
A) Operating activity will have the loss added to profit; investing will increase for the proceeds on the sale.
B) Operating activity will have the loss subtracted from profit; investing activities will increase for the proceeds on the sale.
C) Operating activity will have the loss added to profit; financing activities will increase for the proceeds on the sale.
D) Operating activity will have the loss subtracted to profit; financing activities will increase for the proceeds on the sale.

Question

Quizplus · Accepted Answer

The sale of an asset at a loss affects both operating and investing activities. The loss is added back to profit in the operating section because it is a non-cash expense, and the proceeds from the sale are recorded under investing activities, reflecting the cash inflow from selling the asset.

Sale of an Asset at a Loss Will Affect Which