Question

Which of the following is not true in regard to selling fixed assets?

a.The cash receipt is recorded.
b.The journal entry is similar to discarding fixed assets.
c.If the selling price is more than the book value, a gain is recorded.
d.Accumulated Depreciation will be credited.

Answer 1

Answer: Option D

Explanation: Accumulated depreciation refers to the total amount of reduction in value that an asset has incurred upto a certain point of time. Depreciation is charged on fixed assets.

When a fixed asset is sold or discarded the accumulated deprecation of such asset is debited from the value to ascertain actual value of the asset.

If the selling amount received exceeds the actual value then a gain is recorded.

Hence from the above we can conclude that the correct option is D.