Question

Big Beverage Bottling Inc., a company that bottles beverages for small beverage companies uses expensive equipment in its bottling process. The equipment used in the bottling process for this company is an example of a _______.
A. principal asset.
B. short-term asset.
C. current asset.
D. trade asset.
E. fixed asset.

Answer 1

Answer:

The correct answer is E. fixed asset.

Explanation:

A fixed asset is defined as a property in the possession of a company and that fulfills a main characteristic: it is not convertible into money within the same accounting period, that is, the same year. The machinery necessary to produce bottles is a good purchased by the company in order to carry out its main activity, which is to bottle drinks for small companies, and therefore cannot be converted into money in the short term.