C_TS4FI Financial Accounting Practice Question
When an asset is retired, which G/L account is impacted to record the gain or loss on the retirement?
⚠ Common exam trap
Candidates often mistakenly select the asset balance sheet account or the depreciation account, failing to recognize that the gain or loss is derived from the account determination settings.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The Gain/Loss account as defined in account determination.
Retiring an asset triggers a calculation of its book value versus the retirement proceeds. The difference, if any, is recorded as a gain or loss. This is configured in the asset account determination, which maps the retirement event to the relevant Profit and Loss accounts, ensuring the financial impact of the disposal is correctly captured in the ledger.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
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The accumulated depreciation account.
Why it's wrong here
While the accumulated depreciation account is updated to clear the depreciation history, it does not record the gain or loss itself. The gain or loss is a P&L item, whereas the depreciation account is a balance sheet item, and they serve distinct accounting purposes during the retirement process.
- ✓
The Gain/Loss account as defined in account determination.
Why this is correct
The gain or loss is the net result of the retirement transaction. The account determination configuration identifies the specific P&L accounts to which these amounts should be posted. This ensures that the financial statements accurately reflect the proceeds from the asset disposal relative to its remaining net book value.
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The asset cost account.
Why it's wrong here
The asset cost account is cleared to reduce the historical acquisition value to zero. This is a balance sheet adjustment that does not represent the gain or loss. The gain or loss represents the difference between the retired asset's value and the sales proceeds, which is a different accounting outcome.
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The vendor account for the sale.
Why it's wrong here
A vendor account is only involved if the asset was purchased and the payment is still outstanding. Retirement does not typically involve a vendor, unless the retirement is also a sale to a third party, but the gain/loss itself is always recorded in a G/L account configured for retirement.
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Last reviewed September 2026 · checked against the official SAP exam blueprint
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