What financial action occurs upon the sale of an equity investment?

Upon the sale of an equity investment, several financial actions occur that impact the accounting records. When the investment is sold, it is removed from the books, which reflects that the company no longer holds that investment as an asset. This is essential for maintaining accurate records of the assets the company owns.

Simultaneously, cash is typically received from the sale, which results in an increase in cash assets. However, if we are appreciating the context of the options provided, saying that cash is recorded as a decrease in assets relates to other aspects of the accounting ledger that require understanding of double-entry accounting. In this scenario, it’s important to recognize that the proceeds from the sale ultimately enhance liquidity, which is a primary reason for selling such investments.

Furthermore, when the equity investment is sold, any gain or loss resulting from the difference between the sale price and the original purchase price is recognized in the financial statements. This gain or loss is crucial for understanding the overall performance of the investment and the company’s financial position.

Given that all these actions are indeed relevant and necessary upon the sale of an equity investment, selecting the option that includes all these actions accurately reflects the comprehensive impact that occurs with such a financial transaction. Therefore, the correct choice encompasses the removal of