Which description best defines an Asset?

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Multiple Choice

Which description best defines an Asset?

An asset is a resource that the entity controls as a result of past events and from which future economic benefits are expected to flow. Control means the entity has the ability to use the resource to generate value or to prevent others from using it. These benefits can come as cash inflows, services, or other advantages that will help the entity earn revenue or reduce costs in the future. Examples include cash, accounts receivable, inventory, property, plant and equipment, and intangible assets like patents. This differs from descriptions of liabilities, which are obligations to transfer assets or provide services in the future; or from describing owner’s equity, which is the residual interest of the owners in the assets after liabilities. Saying costs will be paid in the future points more to liabilities or expenses, not to assets.

An asset is a resource that the entity controls as a result of past events and from which future economic benefits are expected to flow. Control means the entity has the ability to use the resource to generate value or to prevent others from using it. These benefits can come as cash inflows, services, or other advantages that will help the entity earn revenue or reduce costs in the future. Examples include cash, accounts receivable, inventory, property, plant and equipment, and intangible assets like patents.

This differs from descriptions of liabilities, which are obligations to transfer assets or provide services in the future; or from describing owner’s equity, which is the residual interest of the owners in the assets after liabilities. Saying costs will be paid in the future points more to liabilities or expenses, not to assets.

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