Which account would be classified as an Asset?

Which account would be classified as an Asset?

• A. Wages Expense
• B. Advertising Expense
• C. Fees Earned
• D. Cash

Answer: (D)

Assets are resources controlled by the entity from which future economic benefits are expected. Cash fits this definition because it is money the business holds that can be used to pay expenses, invest, or settle obligations. Wages expense and Advertising expense are costs recorded to reflect the use of resources in earning revenue; they appear on the income statement and reduce net income, not assets. Fees earned is revenue recognized when earned and increases equity. Therefore, cash is the element that classifies as an asset.

Assets are resources controlled by the entity from which future economic benefits are expected. Cash fits this definition because it is money the business holds that can be used to pay expenses, invest, or settle obligations. Wages expense and Advertising expense are costs recorded to reflect the use of resources in earning revenue; they appear on the income statement and reduce net income, not assets. Fees earned is revenue recognized when earned and increases equity. Therefore, cash is the element that classifies as an asset.