Bob Allen's Company sells for cash a machine it purchased last week for its cost of $15,000. This has the effect of
A) decreasing liabilities and increasing owner's equity.
B) decreasing assets and decreasing liabilities.
C) decreasing assets and increasing owner's equity.
D) no change to the overall accounting equation.

Question

Quizplus · Accepted Answer

Selling a machine for cash at its cost price means the company exchanges one asset (machine) for another (cash) without any gain or loss, thus keeping the overall accounting equation unchanged.

Bob Allen's Company Sells for Cash a Machine It Purchased