The assets of a company:
A) must equal the liabilities of the company.
B) include property, plant, and equipment and common stock.
C) represent economic resources that are expected to produce a future benefit.
D) include merchandise inventory and accounts payable.

Question

Quizplus · Accepted Answer

Assets are economic resources that are expected to provide future benefits to a company. This includes cash, accounts receivable, property, plant, and equipment, and other resources that can be used to generate revenue or provide other advantages to the business.

Option A is incorrect because the total assets of a company do not necessarily have to be equal to its total liabilities. In fact, a company may have more liabilities than assets in certain situations.

Option B is incorrect because common stock is a type of equity, not an asset. Equity is a residual interest in the assets of a company after deducting liabilities.

Option D is incorrect because merchandise inventory and accounts payable are only specific examples of assets and liabilities, respectively, and do not encompass all types of resources or obligations that a company may have.

The Assets of a Company