5.19 Xan has a machine at carrying amount of £13,338 in his accounts. If he sells the machine for £15,000 he makes a profit on disposal of £1,662. Using the accounting equation, what is the effect on his assets, liabilities and capital?

a) ASSETS increase; CAPITAL decreases; LIABILITIES no change.

b) ASSETS decrease; CAPITAL increases; LIABILITIES increase.

c) ASSETS increase; CAPITAL increases; LIABILITIES no change.

d) ASSETS decrease; CAPITAL no change; LIABILITIES decrease.