In financial accounting, real estate investments are classified as:

• A. Revenue
• B. Current liabilities
• C. Owner's equity
• D. Long-term assets

Answer: (D)

Verified step by step guidance

1. Understand the classification of assets in financial accounting. Assets are resources owned by a company that provide future economic benefits. They are typically divided into current assets and long-term assets based on their liquidity and usage timeframe.
2. Recognize that real estate investments are not typically liquid and are held for long-term purposes, such as generating rental income or appreciating in value over time. This makes them unsuitable for classification as current assets.
3. Eliminate the incorrect options: Revenue refers to income earned from business operations, current liabilities are obligations due within a year, and owner's equity represents the residual interest in the assets of the entity after deducting liabilities. None of these categories align with the nature of real estate investments.
4. Identify that real estate investments are classified as long-term assets because they are held for extended periods and are not intended for immediate sale or consumption.
5. Conclude that the correct classification for real estate investments in financial accounting is long-term assets, as they are resources expected to provide economic benefits over a prolonged period.