Which of the following groups consists only of asset accounts?

• A. Common Stock, Prepaid Rent, Land
• B. Notes Payable, Cash, Retained Earnings
• C. Accounts Payable, Equipment, Supplies
• D. Cash, Accounts Receivable, Inventory

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of asset accounts. Assets are resources owned by a company that have economic value and are expected to provide future benefits. Examples include cash, accounts receivable, inventory, land, equipment, and supplies.
2. Step 2: Review the provided options and identify which accounts belong to the asset category. For example, Common Stock and Retained Earnings are equity accounts, Notes Payable and Accounts Payable are liability accounts, and Prepaid Rent, Land, Cash, Accounts Receivable, Inventory, Equipment, and Supplies are asset accounts.
3. Step 3: Eliminate options that include accounts not classified as assets. For instance, the first option includes Common Stock, which is an equity account, and the second option includes Notes Payable and Retained Earnings, which are liability and equity accounts respectively.
4. Step 4: Focus on the correct answer provided: Cash, Accounts Receivable, Inventory. Verify that each account in this group is an asset. Cash is a liquid asset, Accounts Receivable represents amounts owed to the company, and Inventory consists of goods available for sale.
5. Step 5: Confirm that the correct answer consists only of asset accounts and does not include any liability or equity accounts. This ensures the group is accurately classified as assets.