Multiple Choice
Which of the following is an example of an express warranty?
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1. Introduction to Accounting
Types of Accounting
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Which of the following is NOT considered a financial asset?
A
Cash
B
Bonds
C
Inventory
D
Accounts Receivable
Verified step by step guidance1
Understand the definition of a financial asset: A financial asset is any asset that derives its value from a contractual claim, such as cash, stocks, bonds, or accounts receivable.
Review the options provided: Cash, Bonds, Inventory, and Accounts Receivable.
Analyze each option: Cash is a financial asset because it is a medium of exchange and store of value. Bonds are financial assets because they represent a contractual claim to future payments. Accounts Receivable is a financial asset because it represents a claim to receive cash from customers.
Consider Inventory: Inventory is a physical asset, not a financial asset. It represents goods held for sale or production, and its value is tied to its physical characteristics rather than a contractual claim.
Conclude that Inventory is NOT a financial asset, as it does not meet the criteria of deriving value from a contractual claim.
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