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a. Total current assets.
b. Current ratio.
c. Net profit.
d. Net working capital.
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Answer C :
Net Profit Will Decrease
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also the rest of Answers will increase
entry of fixed asset sale
debit / Cash << will affect - Current Assets ( Balance Sheet )
debit / Accumulated Depreciation << will affect - Fixed Assets ( Balance Sheet )
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credit / Fixed Asset << will affect - Fixed Asset ( Balance Sheet )
credit / Loss on Sale of Fixed Assets << will decrease ( net income )
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thanks from all
The Net Profit will decrease due to the loss on sale of a fixed asset. Setting all other things constant, total current assets, current ratio and net working capital will increase.
1-net profit will decrease by the difference between sale price and net book value . current asset will increase with cash , bank or notes receivable (may be constant see number2 ) . as a result net working capital and current ratio will increase.
2- if the sales of asset for settle liability total current asset and current ratio constant , but for net working capital is depend of the natural of liability either current or long term.
c. Net profit. *****************
Option C. Net profit will decrease
Net profit will decrease,,,,
C)NET PROFIT = BOOK VALUE - SALES PRICE = LOSS ON SALES , LOSS ON SALE WILL BE DEBITED TO PROFIT AND LOSS ACCOUNT ,THERE FOR NET PROFIT WILL BE DECREASE
Net profit will be decreased.
Net Profit will decrease due to loss on sale.
Answer is C - Net Profit. As the Fixed asset is sold for a price less than the book value, the net result is loss to the establishment and it will reduce the net profit. Accounting principle followed is Debit all Losses and Credit all gains.
