Question
An example of a long-term asset is: Prepayments Trade receivable Property, plant and equipment Trade payable Rent Bank loan Inventory Cash
Answer
4
(234 Votes)
Bridget
Veteran · Tutor for 11 years
Answer
Property, plant and equipment
Explanation
## Step 1:A long-term asset, also called a fixed asset or non-current asset, is property a firm owns, uses in its operations, and is not readily expected to convert into cash (consumed or sold) within a year. Examples of long-term assets include land, buildings, machinery, and equipment.## Step 2:Examine each option given in the question and establish whether it is a short-term (current) asset or a long-term (non-current) asset.### Prepayments Prepayments are usually considered as a current asset because they will likely gain benefits within a short period, typically a year. ### Trade Receivables Trade receivables are short-term assets because they are amounts customers owe a company for goods or services rendered. They are expected to turn into cash, generally in less than a year as the aim is to collect these payments speedily. ### Property, Plant and Equipment Property, Plant and Equipment, known as fixed assets, could expect usage over an extended period. Thus, they are categorized as long-term assets.### Trade payable Trade payable refers to money owing by a company to its suppliers linked to the credit extended toward purchasing physical goods. They are short-term liabilities, not assets at all.### Rent Rent can refer to income if the organization is the landlord or expenditures if located in a rented premise. It's neither a short-term nor a long-term asset, but it rather relates to operational revenues or expenditures.### Bank loanA bank loan for a company refers to company liabilities. Intended as not obligatory to be paid back within a year, it's categorized as long-term liabilities if they don’t require settlement within a year, not an asset.### InventoryInventory, such as materials and finished goods, is a current asset since a company is likely to sell (turning into cash) or utilize it within a single quarter or business year. ### CashCash is the most liquid form a company has that can readily be used for diverse business operations. As it can be spent away at any time, it is deemed as a current asset.