Which of the following describes fixed assets?

Which of the following describes fixed assets?

• A. Items of value expected to remain in a business for less than one year
• B. Non-current assets likely to last longer than one year, like machinery
• C. Cash and cash equivalents held by a business
• D. Goods that are subject to depreciation

Answer: (B)

Fixed assets are described as non-current assets that are expected to last longer than one year and are not intended for immediate sale. This includes items like machinery, buildings, and equipment that a business uses to produce goods or services. They are essential for the operation of the business and contribute to generating revenue over an extended period. The significance of fixed assets is that they are a crucial part of a company's balance sheet and represent long-term investments. Their longevity allows businesses to spread the cost of these items over their useful lives through depreciation. This accounting measure reflects the gradual wear and tear on these assets, providing a more accurate picture of a company’s financial health. In contrast, other options do not accurately define fixed assets. For instance, items expected to remain in a business for less than one year, cash and cash equivalents, or goods that are subject to depreciation without specifying the long-term nature of fixed assets would not fit the criteria for being classified as fixed assets.

Fixed assets are described as non-current assets that are expected to last longer than one year and are not intended for immediate sale. This includes items like machinery, buildings, and equipment that a business uses to produce goods or services. They are essential for the operation of the business and contribute to generating revenue over an extended period.

The significance of fixed assets is that they are a crucial part of a company's balance sheet and represent long-term investments. Their longevity allows businesses to spread the cost of these items over their useful lives through depreciation. This accounting measure reflects the gradual wear and tear on these assets, providing a more accurate picture of a company’s financial health.

In contrast, other options do not accurately define fixed assets. For instance, items expected to remain in a business for less than one year, cash and cash equivalents, or goods that are subject to depreciation without specifying the long-term nature of fixed assets would not fit the criteria for being classified as fixed assets.