Which item is a fixed asset?

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Study for the AAT Level 2 Introduction to Bookkeeping Test. Use flashcards and multiple choice questions with hints and explanations. Prepare effectively for your exam!

Multiple Choice

Which item is a fixed asset?

Explanation:
Fixed assets are long-term tangible resources a business uses in its operations and expects to keep for more than one year. They’re not bought to be sold in the ordinary course and are typically depreciated over their useful life. The delivery van fits this idea: it’s a vehicle used to move goods or provide services, intended to be used for several years, so it’s classified as a fixed asset and recorded at cost minus depreciation. The other items are current assets: stock is inventory held for sale, cash at bank is cash available now, and accounts receivable are amounts due from customers; these are expected to be converted to cash or used up within a short period and are not fixed assets.

Fixed assets are long-term tangible resources a business uses in its operations and expects to keep for more than one year. They’re not bought to be sold in the ordinary course and are typically depreciated over their useful life. The delivery van fits this idea: it’s a vehicle used to move goods or provide services, intended to be used for several years, so it’s classified as a fixed asset and recorded at cost minus depreciation. The other items are current assets: stock is inventory held for sale, cash at bank is cash available now, and accounts receivable are amounts due from customers; these are expected to be converted to cash or used up within a short period and are not fixed assets.

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