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Which of the following is a disadvantage of S corporations?
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1. Introduction to Accounting
Types of Accounting
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Which of the following items are classified as plant assets?
A
Machinery used in production
B
Prepaid insurance
C
Inventory held for resale
D
Accounts receivable
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Understand the definition of plant assets: Plant assets are tangible, long-term assets used in the operations of a business to produce goods or services. They are not intended for resale and typically include items like machinery, buildings, and equipment.
Analyze each item in the list to determine if it meets the criteria for plant assets: Tangible, long-term, and used in operations.
Evaluate 'Machinery used in production': This item is tangible, long-term, and directly used in the operations of the business to produce goods. It qualifies as a plant asset.
Evaluate 'Prepaid insurance': This is an intangible asset and represents a prepayment for future expenses. It does not meet the criteria for plant assets.
Evaluate 'Inventory held for resale' and 'Accounts receivable': Inventory is intended for resale, and accounts receivable represent amounts owed to the business. Neither are tangible, long-term assets used in operations, so they do not qualify as plant assets.
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