Question

Question 12
A company sold a piece of manufacturing equipment for $30,000 cash. The equipment had been listed on the balance sheet at a net book value of $25,000, so the company recorded a gain on sale of equipment of $5,000.

Which of the following items would be increased by this equipment sale transaction? (check all that apply)


Total Assets



Net Income



Cash from Investing



Equipment



Cash from Operations


1 point
Coursera Honor Code Learn m

Answer 1

In the transaction described, the following items would be increased:

1. **Total Assets**: Cash increases by $30,000 from the sale, and although the equipment (an asset) is removed from the books, the overall assets still increase due to the cash influx.

2. **Net Income**: The company recorded a gain of $5,000 on the sale of the equipment, which would increase net income.

3. **Cash from Investing**: The sale of the equipment generates cash inflow (increase in cash), and sales of long-term assets typically fall under cash flows from investing activities.

The following items would not be increased:

- **Equipment**: This account would decrease because the equipment is sold.

- **Cash from Operations**: The sale of equipment does not affect cash from operations; it affects cash from investing activities.

So the correct choices are:

- Total Assets
- Net Income
- Cash from Investing