Sales of Assets

This Sales code records income the business earns from sales of assets. As an income account, it normally carries a credit balance: credit entries increase the balance (recording new income) and debit entries decrease it (for example, a credit note issued to a customer).

Real-world examples

Logistics and haulage (vehicle and plant disposals)

A haulage company routinely sells vehicles once they're due for replacement. Because VAT was reclaimed on the vehicle's original purchase, VAT must be charged on the sale — a lorry sold for £14,400 (£12,000 net) posts as a debit of £14,400 to 1100 (Debtors Control Account), a credit of £12,000 to 4200 (Sales of Assets), and a credit of £2,400 to 2200 (Sales Tax Control Account). The 4200 credit isn't the whole picture on the P&L, though: it's usually offset by removing the asset's net book value from the fixed asset register, so the real profit or loss on disposal is the difference between the two, not the £12,000 sale price alone.

Owner-occupier selling surplus premises

A business that's outgrown its premises sells a building it no longer needs. Land and property sales are normally VAT-exempt unless the seller has opted to tax the property, in which case standard VAT applies — so a straightforward disposal of £250,000 might post as a debit of £250,000 to 1100 and a credit of £250,000 to 4200 with no VAT at all, very different from the haulage example above even though both sit on the same code.

Commonly confused with

Because code 4101 (Sales Type E) sits right next to this one in Sales, it's a common mis-posting target. Code 4200 is specifically for sales of assets, while 4101 covers sales type e — similar in nature, but keeping them separate is what makes the sales section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

A sale posted to the wrong Sales code won't change total turnover, but it will distort the sales analysis used to see which products, services or channels are actually driving revenue.

Other codes in Sales