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Which one of the following best states the fundamental accounting equation?
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1. Introduction to Accounting
Fundamental Accounting Equation
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A plant asset can be defined by which of the following statements?
A
A long-term tangible asset used in the operations of a business and not intended for resale.
B
A short-term investment held for trading purposes.
C
A liability arising from the purchase of inventory on credit.
D
An intangible asset such as a patent or trademark.
Guida verificata passo dopo passo1
Step 1: Understand the definition of a plant asset. A plant asset is a long-term tangible asset used in the operations of a business and is not intended for resale. Examples include machinery, buildings, and equipment.
Step 2: Eliminate options that do not match the definition. For example, 'A short-term investment held for trading purposes' does not fit because it is not a tangible asset used in operations.
Step 3: Consider the option 'A liability arising from the purchase of inventory on credit.' This is incorrect because liabilities are obligations, not tangible assets.
Step 4: Evaluate the option 'An intangible asset such as a patent or trademark.' Intangible assets are not physical and therefore do not qualify as plant assets.
Step 5: Confirm that the correct answer is 'A long-term tangible asset used in the operations of a business and not intended for resale,' as it aligns with the definition of a plant asset.
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