Which of the following best defines an asset in accounting?

• A. An obligation arising from past events, the settlement of which is expected to result in an outflow of resources.
• B. A resource controlled by an entity as a result of past events and from which future economic benefits are expected to flow to the entity.
• C. The residual interest in the assets of the entity after deducting liabilities.
• D. A record of all financial transactions made by a business during a specific period.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the definition of an asset in accounting. An asset is a resource controlled by an entity as a result of past events, and it is expected to provide future economic benefits to the entity.
2. Step 2: Compare the given options to the definition of an asset. Eliminate options that do not align with the concept of a resource providing future economic benefits.
3. Step 3: Analyze the first option: 'An obligation arising from past events, the settlement of which is expected to result in an outflow of resources.' This describes a liability, not an asset.
4. Step 4: Analyze the third option: 'The residual interest in the assets of the entity after deducting liabilities.' This describes equity, not an asset.
5. Step 5: Analyze the fourth option: 'A record of all financial transactions made by a business during a specific period.' This describes a financial statement or ledger, not an asset. The correct answer is the second option, which matches the definition of an asset.