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:

Accounts Receivable

Money owed to a company by its customers for goods or services delivered but not yet paid for.

Zero-Based Budgeting

A budgeting method where all expenses must be justified for each new period, starting from a "zero base," rather than just adjusting previous budgets.

Cash Budget

An estimate of cash inflows and outflows over a specific period, used to manage and plan for cash needs.

Minimum Cash Balance

The lowest amount of cash that a company aims to maintain in its accounts to adequately meet its operational and financial obligations.