Types of Assets

Plates in the dining room are categorised into the following asset group

• Stock

• Intangible

• Fixed or physical assets

• Financial

The Head Chef is categorised into the following asset group

• Stock

• Person

• Fixed or physical assets

• Intangible

The goodwill amount paid when purchasing a business is categorised into the following asset group

• Person

• Financial

• Fixed or physical assets

• Intangible

A compound asset is ......

• an asset that is comprised of a group of intangible assets

• an asset that is a collection of financial assets

• an asset that is comprised of a collection or group of simple assets

• an asset that is comprised of a collection or group of complex assets

A candle holder on a restaurants dining table is classified as a simple asset

• TRUE

• FALSE

An asset is defined as:

• Something that is of no value to a business

• Something that helps a business meet its objectives

• Something that is always easy to replace

• Something that does not require any maintenance

Answer explanation

The correct answer is B. According to the text, an asset is defined by accountants as "something of value"; it is anything that helps a business meet its objectives.

Which of the following is a key difference between current assets and fixed assets?

• Current assets are purchased on a regular basis, while fixed assets are purchased irregularly.

• The cost of an individual current asset is usually insignificant, while the purchase of a fixed asset represents a significant investment for the business.

• Current assets are not intended for sale, while fixed assets are short-term assets that are expected to be converted into cash within a year.

Answer explanation

the individual cost of an individual current asset is usually insignificant, which means that the item can be purchased and tested to ensure it is the correct item for the requirements. In contrast, the purchase of a fixed asset represents a significant investment for the business and the long-term consequences for the business should the wrong asset be purchased can be significant, potentially leading to business failure.

Beer and Wine in a restaurant operation are categorised into the following asset group

• Fixed or physical assets

• Person

• Stock

• Intangible