Which of the following is NOT considered an asset in financial accounting?

• A. Prepaid Expenses
• B. Cash
• C. Accounts Payable
• D. Inventory

Answer: (C)

Verified step by step guidance

1. Understand the definition of an asset: In financial accounting, an asset is a resource owned or controlled by a company that is expected to provide future economic benefits.
2. Review the items listed in the problem: Prepaid Expenses, Cash, Accounts Payable, and Inventory.
3. Analyze each item: Prepaid Expenses represent payments made in advance for goods or services, which are considered assets because they provide future benefits. Cash is a liquid asset used for transactions. Inventory is an asset because it represents goods available for sale or production.
4. Identify the exception: Accounts Payable is a liability, not an asset. It represents amounts owed by the company to suppliers or creditors for goods or services received.
5. Conclude that Accounts Payable is NOT considered an asset in financial accounting, as it does not provide future economic benefits but instead represents an obligation.