2. Which of the following is not an asset?

Question

BlackTom AI · Accepted Answer

Assets are resources controlled by a business that are expected to provide future economic benefits. Liabilities are present obligations to transfer resources (economic sacrifices) to other parties in the future. These definitions are the key accounting concepts needed to classify the items in the choices.

Step-by-step reasoning:
1. Apply the asset definition to each choice:
   - Buildings: A building owned by the business is a tangible long‑term resource that will provide future economic benefits (use of space, rental income, resale). Therefore it meets the asset criteria (property, plant and equipment).
   - Cash balance: Cash is the most liquid resource and directly provides economic benefit (can be used to pay suppliers, salaries, invest). Cash is clearly a current asset.
   - Trade receivables: Amounts owed by customers from credit sales represent future cash inflows; they are economic benefits the business controls, so they are current assets.
   - Loan from K. Harris: This represents money the business has borrowed from K. Harris. That borrowing creates an obligation to repay K. Harris in the future. An obligation to pay is a liability, not an asset.

2. No numerical calculations are required; classification rests on the nature of each item relative to the asset/liability definitions and recognition criteria (control, future economic benefit, and measurability).

Why the correct answer is correct:
- “Loan from K. Harris” is a borrowing (a debt) owed by the company. It is a present obligation to transfer cash (or other resources) and therefore is recorded as a liability on the balance sheet, not as an asset.

Why the other options are incorrect:
- Buildings (a) are assets because they provide future benefits and are owned.
- Cash balance (b) is an asset because it is a resource the company controls.
- Trade receivables (c) are assets because they represent expected future cash inflows.

Conclusion: The item that is NOT an asset is d. Loan from K. Harris, which matches the provided correct answer.

2. Which of the following is not an asset?单项选择题

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