Accounting for IGCSE & O level - Accounting Procedures (Section 24 - No. 45)
What is the impact on the accounting equation (Assets = Liabilities + Equity) when a loss on disposal is recorded?
Assets decrease, Equity decreases.
Assets increase, Equity increases.
Assets decrease, Equity increases.
No impact on the accounting equation.
Explanation
A loss reduces equity (through retained earnings), and assets are also reduced through the asset's removal from the books.
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