Explanation Classification of Assets Asset: Assets refer to the resources owned by the business, which are utilized in the course of the business to generate revenue. In accounting, the assets are classified into two categories: Current Assets: Current assets are the assets that are easily convertible to cash within a year of business operations. For example, cash and cash equals, Account receivables, Inventories, Prepaid Expenses. Non-current Assets: It indicates to the assets otherwise known as fixed assets, that are held by the concern for more than one year and are not meant to be sold in the near future rather held to generate profits. It is classified into two categories: Intangible Assets: It refers to the assets that have physical existence that can be seen, felt and touched. For example, property, furniture, and machinery. Tangible Assets: It refers to the assets that does not have any physical existence and cannot be seen, felt or touched. For example, patents, copyrights, and goodwill . Reasons for identification of items 1. Accounts Receivable – Current assets Current assets refer to the assets of a business, which are kept in reserve for converting them into cash, in a short time period, or within twelve months. As the accounts, receivable would be collected as cash once the amount given by the customer (within a short period). Therefore, it comes under the category of current assets. 2. Building – Property, plant, and equipment Property, plant, and equipment, known as operating assets and it is used in the operational activities of the business...

14th Edition

ISBN: 9781305088436

Author: Carl Warren, Jim Reeve, Jonathan Duchac

Publisher: Cengage Learning

See similar textbooks

Videos

Question

Chapter 4, Problem 10E

To determine

Identify the following items as (a) current asset or (b) property, plant and equipment.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 4, Problem 9E

Chapter 4, Problem 11E

Students have asked these similar questions

Which of the following accounts would be classified as a fixed (property, plant and equipment asset)? Group of answer choices equipment accounts receivable cash accounts payable

Which of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? Land held for investment Accumulated Depreciation Office Supplies Mortgage Payable

Which of the following accounts would be included in the property, plant, and equipment category of the classified balance sheet? a. Land held for investment b. Accumulated Depreciation c. Office Supplies d. Mortgage Payable

Chapter 4 Solutions

Financial Accounting

Ch. 4 - Prob. 1DQ Ch. 4 - Describe the nature of the assets that compose the...Ch. 4 - Prob. 3DQ Ch. 4 - Prob. 4DQ Ch. 4 - Why are closing entries required at the end of an...Ch. 4 - Prob. 6DQ Ch. 4 - What is the purpose of the post-closing trial...Ch. 4 - Prob. 8DQ Ch. 4 - Prob. 9DQ Ch. 4 - Recent fiscal years for several well-known...

Ch. 4 - The balances for the accounts that follow appear...Ch. 4 - The balances for the accounts that follow appear...Ch. 4 - Marcie Davies owns and operates Gemini Advertising...Ch. 4 - Prob. 2PEB Ch. 4 - The following accounts appear in an adjusted trial...Ch. 4 - The following accounts appear in an adjusted trial...Ch. 4 - After the accounts have been adjusted at October...Ch. 4 - After the accounts have been adjusted at April 30,...Ch. 4 - From the following list of steps in the accounting...Ch. 4 - From the following list of steps in the accounting...Ch. 4 - Balance sheet data for HQ Properties Company...Ch. 4 - Balance sheet data for Brimstone Company follows:...Ch. 4 - The balances for the accounts that follow appear...Ch. 4 - Prob. 2E Ch. 4 - Bamboo Consulting is a consulting firm owned and...Ch. 4 - Elliptical Consulting is a consulting firm owned...Ch. 4 - The following account balances were taken from the...Ch. 4 - The following revenue and expense account balances...Ch. 4 - FedEx Corporation had the following revenue and...Ch. 4 - Apex Systems Co. offers its services to residents...Ch. 4 - Selected accounts from the ledger of Restoration...Ch. 4 - Prob. 10E Ch. 4 - At the balance sheet date, a business owes a...Ch. 4 - Prob. 12E Ch. 4 - List the errors you find in the following balance...Ch. 4 - Prob. 14E Ch. 4 - Prior to its closing, Income Summary had total...Ch. 4 - After all revenue and expense accounts have been...Ch. 4 - Prob. 17E Ch. 4 - Prob. 18E Ch. 4 - An accountant prepared the following post-closing...Ch. 4 - Rearrange the following steps in the accounting...Ch. 4 - The following data (in thousands) were taken from...Ch. 4 - Prob. 22E Ch. 4 - Prob. 23E Ch. 4 - Alert Security Services Co. offers security...Ch. 4 - Alert Security Services Co. offers security...Ch. 4 - Prob. 26E Ch. 4 - Based on the data in Exercise 4-24, prepare the...Ch. 4 - Based on the data in Exercise 4-25, prepare the...Ch. 4 - Prob. 1PA Ch. 4 - Finders Investigative Services is an investigative...Ch. 4 - The unadjusted trial balance of Epicenter Laundry...Ch. 4 - The unadjusted trial balance of Lakota Freight Co....Ch. 4 - For the past several years, Steffy Lopez has...Ch. 4 - Last Chance Company offers legal consulting advice...Ch. 4 - The Gorman Group is a financial planning services...Ch. 4 - The unadjusted trial balance of La Mesa Laundry at...Ch. 4 - The unadjusted trial balance of Recessive...Ch. 4 - For the past several years, Jeff Horton has...Ch. 4 - The unadjusted trial balance of PS Music as of...Ch. 4 - Kelly Pitney began her consulting business, Kelly...Ch. 4 - Picasso Graphics is a graphics arts design...Ch. 4 - The following is an excerpt from a telephone...Ch. 4 - Prob. 3CP

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Identify the following items as (a) current asset or (b) property, plant and equipment.

Solution Summary: The author identifies the following items as (a) current asset or (b) property, plant, and equipment.

Videos

Identify the following items as (a) current asset or (b) property, plant and equipment.

Want to see the full answer?

Chapter 4 Solutions