What are the definitions of assets, debtors, fixed assets, current assets, and trading stock in accounting?

Here are the answers to the accounting concepts questions:

1.1.1 The possessions of a business are called its:

• D assets.
  • Assets are resources controlled by the business as a result of past events and from which future economic benefits are expected to flow to the entity.

1.1.2 Parties that owe the business money are called:

• A debtors.
  • Debtors are individuals or entities that owe money to the business, usually from credit sales.

1.1.3 Equipment and buildings owned by a business are called:

• C fixed assets.
  • Fixed assets (also known as non-current assets or property, plant, and equipment) are long-term tangible assets used in the operation of a business and not expected to be converted into cash within one year.

1.1.4 An asset purchased with the purpose of exchanging it for cash within one year is:

• B a current asset.
  • Current assets are assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.

1.1.5 Fixed assets are purchased for:

• C the purpose of running the business.
  • Fixed assets are acquired for long-term use in the production of goods or services, or for administrative purposes, rather than for resale.

1.1.6 Which asset is not a fixed asset?

• B Trading stock
  • Trading stock (inventory) is a current asset because it is held for sale in the ordinary course of business. Land and buildings, equipment, and vehicles are all examples of fixed assets.