Question

Which of the following items would not fall under the definition of an asset?

• A. Land
• B. Machine
• C. Cash
• D. Owner Equity

Answer 1

The correct option is D Owner Equity

An asset is anything of value or a resource of value that can be converted into cash. Individuals, companies, and governments own assets.

For a company, an asset might generate revenue, or a company might benefit in some way from owning or using the asset.

Separate entity concept defines that owner and the business both are separate legal entity. Accordingly, owner is treated as the creditors of the business.

Capital contributed by the owner is a liability for the business and to be shown in balance sheet. Its not an asset.