Accounting Online Program Certification Practice Test

How much should Muncher plc debit in its administrative expenses after selling fixtures?

1. £1,448

2. £1,898

3. £2,000

4. £1,500

The correct answer is: £1,898

To determine how much Muncher plc should debit in its administrative expenses after selling fixtures, we need to consider the implications of such a transaction on its accounting records. When a company sells fixtures, the gain or loss from that sale must be accounted for. The accounting treatment usually involves removing the asset's book value from the balance sheet and recognizing any gain or loss in the income statement. In this case, the administrative expenses likely reflect the costs associated with the disposal of these fixtures, which can include depreciation, sale-related costs, or other associated expenses. If £1,898 is the amount chosen, it suggests that this figure incorporates the relevant costs recognized from the sale of the fixtures alongside any losses that might have been realized from the sale. This figure likely reflects the net impact on administrative expenses after accounting for any previous profits or losses related to the fixtures. The amount to be debited in administrative expenses should capture the overall impact of selling the fixtures on the company's accounts, including any costs incurred as a result or recognized losses. Therefore, if £1,898 is the correct answer, it indicates that this is the appropriately calculated total reflecting these elements.