Which of the following statements is incorrect with respect to the sale of a depreciable asset for a loss?
A)Net income deceases and total assets decrease.
B)Net income and stockholders' equity both decrease.
C)Total assets and stockholders' equity both decrease.
D)Total assets increase and stockholders' equity decreases.

Question

Quizplus · Accepted Answer

Total assets decrease when an asset is sold at a loss because the proceeds (selling price) are less than book value. Stockholders' equity decreases because the decrease in net income reduces retained earnings.

Which of the Following Statements Is Incorrect with Respect to the Sale