Which statement is true regarding selling assets as a method of raising cash?

Selling assets as a method of raising cash typically reduces the overall asset base of a company because when an asset is sold, it is no longer included on the balance sheet. This transaction directly decreases total assets, impacting the company's accounting and financial position. While the company may receive cash from the sale, which improves liquidity temporarily, the long-term implications include having fewer assets to generate revenue or support operations.

The reduction in asset base often raises questions about the company's resource availability and potential future earnings. Even though selling an asset can be a strategic move to improve cash flow or navigate financial difficulties, it does not guarantee profitability, nor does it consistently affect liabilities in a straightforward manner. Additionally, it does impact liquidity positively by providing cash, contrary to the idea that it does not impact the company's liquidity. Thus, this understanding highlights the importance of what it means to sell assets and how it influences the overall financial state of a company.