Accounting for IGCSE & O level - Accounting Procedures (Section 24 - No. 3)
What is the impact on the accounting equation (Assets = Liabilities + Equity) if a gain on disposal is recognized?
Assets increase, equity increases.
Assets decrease, equity decreases.
Assets increase, equity decreases.
Assets decrease, equity increases.
Explanation
A gain increases equity and assets. The cash from the sale increases assets. Retained earnings (equity) increases with the gain.
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