An office building that a company owns and uses in the course of its business would be shown in the company's accounts as which type of asset?

• A. Current liability.
• B. Fixed liability.
• C. Current asset.
• D. Fixed asset.

Answer: (D)

Assets are classified by how long they provide benefits and how quickly they can be converted to cash. An office building owned and used in the business is a long-term, tangible resource, not something you expect to sell or convert to cash within a year. So it fits as a fixed asset (often called a non-current asset) on the balance sheet. It’s recorded at cost and then depreciated over its useful life to reflect the gradual consumption of its value. This differentiates it from current assets like cash, inventory, or receivables, which are expected to be used or converted to cash within one year.