Multiple Choice
Which of the following statements is true about the liabilities of a firm?
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9. Current Liabilities
Types of Liabilities
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Which of the following is classified as a plant asset?
A
Unearned Revenue
B
Accounts Payable
C
Equipment
D
Notes Payable
Verified step by step guidance1
Understand the definition of a plant asset: Plant assets are tangible long-term assets used in the operations of a business, such as buildings, machinery, and equipment. They are not intended for resale and are subject to depreciation over time.
Review the options provided: Unearned Revenue, Accounts Payable, Equipment, and Notes Payable.
Analyze each option: Unearned Revenue is a liability representing money received before services are performed. Accounts Payable is a liability representing amounts owed to creditors. Notes Payable is also a liability representing written promises to pay a certain amount. Equipment, however, is a tangible asset used in business operations and fits the definition of a plant asset.
Confirm the classification: Equipment is classified as a plant asset because it is a physical, long-term asset used in the operations of the business.
Conclude that Equipment is the correct answer based on its characteristics aligning with the definition of a plant asset.
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