Equipment with an Original Cost of $75,000 and Accumulated Depreciation

question 77

Multiple Choice

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would

• A) increase by $48,000
• B) decrease by $7,000
• C) increase by $55,000
• D) decrease by $27,000

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Definitions:

Pretax Financial Income

The total earnings of a company before any taxes have been deducted.

Taxable Income

The amount of an individual's or corporation's income that is subject to income tax, after exemptions, deductions, and allowances are factored in.

Fraudulent Activity

Deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.

Income Tax Liability

The amount of money an individual or corporation owes to the government based on the taxable earnings for a fiscal period.