Gain is defined as.

Gain is defined as.

• A. Increase in equity resulting from activity other than selling goods/services (Ex. selling a plant asset)
• B. Increase in equity from selling goods/services
• C. Decrease in equity resulting from expenses
• D. Increase in liabilities

Answer: (A)

Gain is an increase in equity that comes from incidental or peripheral activities, not from the core business of selling goods or services. So, when a non-operating transaction, like selling a plant asset for more than its book value, occurs, the difference is a gain and it increases equity. This makes the option describing an increase in equity from activity other than selling goods or services the best fit. Selling goods/services affects revenue, which increases equity but is not called a gain. A decrease in equity from expenses represents a loss, and an increase in liabilities is not an equity change.

Gain is an increase in equity that comes from incidental or peripheral activities, not from the core business of selling goods or services. So, when a non-operating transaction, like selling a plant asset for more than its book value, occurs, the difference is a gain and it increases equity. This makes the option describing an increase in equity from activity other than selling goods or services the best fit. Selling goods/services affects revenue, which increases equity but is not called a gain. A decrease in equity from expenses represents a loss, and an increase in liabilities is not an equity change.