Which account is classified as an asset?

Which account is classified as an asset?

• A. Accounts Payable
• B. Accounts Receivable
• C. Sales
• D. Owner's Drawing

Answer: (B)

Assets are resources the business controls that are expected to bring future economic benefits. Accounts receivable fits this because it’s money owed to the business by customers who purchased on credit, representing a future inflow of cash. It’s typically reported as a current asset on the balance sheet since it’s expected to be collected within a short period. In contrast, accounts payable is a liability—the amounts the business must pay to others—sales is revenue that increases equity, and owner’s drawing is a withdrawal that decreases the owner's equity. So accounts receivable is the asset.

Assets are resources the business controls that are expected to bring future economic benefits. Accounts receivable fits this because it’s money owed to the business by customers who purchased on credit, representing a future inflow of cash. It’s typically reported as a current asset on the balance sheet since it’s expected to be collected within a short period. In contrast, accounts payable is a liability—the amounts the business must pay to others—sales is revenue that increases equity, and owner’s drawing is a withdrawal that decreases the owner's equity. So accounts receivable is the asset.