If A Company Fails To Record A Sale Of Fixed Asset
If a compa ny fails to record a Sale of Fixed Asset / N on Current Asset , t he n it affects b oth Income Statement and b ala nce s heet. I n order to understand t he effects made o n t h ese Financial Statements due to t h e lack of recording of Sale or Disposal of Fixed Asset , we firstly u nderstand t he possi b le jour nal entries related to t he sale of fixed asset a nd t h en see t he effects o f relevant accounts on financial statements. Possib le Effects of not recording Sale or Disposal of Fixed Assets T here are three possi b ilities o n t he sale of non current assets w hich ca n b e expressed as show n b elow: Gain / Loss Or N o Gain N o Loss On Sale of Fixed Asset (i) Depreciation for t he period is charged to expe nse is not recorded so it increases / overstates N et income in Income Statement. (ii) Gai n or Loss is not recorded in Income Statement w hich affects net Income i.e. increases or decreases it. (iii) Cas h as a Current As...