Practice Quiz

CLEP Accounting

Category - Accounting

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Larry’s Lobsters sells a truck that is no longer used in the business and the amount they receive for the truck is more than the amount carried in the accounting books. What is reported on the income statement?
  1. An expense
  2. Revenue
  3. Profit
  4. Loss
  5. A gain
Explanation
Answer - E - A gain will be reported on the income statement if the truck sells for a higher value than shown in the accounting books.

Key Takeaway: Since the sale of the truck is outside the main activity of the business and the amount received was more than what was shown on the books, it is reported as a gain, which is shown on the income statement.
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