Question

Last year Ace charged $2,056,000 Depreciation on the Income Statement of Andrews. If early this year Ace sold all its depreicable assets for their book value, the effect on Andrews's financial statements would be (all other items remaining equal):_________

a. Increase Net Cash from operations
b. Decrease Net Cash from operations on the Cash Flow Statement
c. No impact on Net Cash from operations
d. Just impact the Balance Sheet

Answer 1

Answer: d. Just impact the Balance Sheet

Step-by-step explanation:

The sale of the assets would impact the balance sheet because it would reduce the amount of fixed assets that the company records as assets which means that assets as a whole will be reduced.

The Cashflow statement will also be affected because cash would come in from the sales but this will be reflected in the investing activities not the operating activities.