How is office furniture classified in accounting terms?

How is office furniture classified in accounting terms?

• A. Current Asset
• B. Leasehold Improvement
• C. Fixed Asset
• D. Intangible Asset

Answer: (C)

Office furniture is classified as a fixed asset in accounting terms because it is a tangible asset that is utilized in the operation of a business and has a useful life extending beyond a single accounting period, typically longer than one year. Fixed assets, also known as non-current assets, include items such as property, equipment, and machinery, which are not intended for resale but rather for long-term use to generate revenue. This classification reflects the depreciation process, where the cost of the office furniture is gradually expensed over its useful life on the income statement. Investment in office furniture is considered critical to the functionality of a business, and its value is recorded on the balance sheet as part of the organization's capital assets. The other classifications, such as current assets, leasehold improvements, and intangible assets, pertain to different categories of resources that do not accurately describe the characteristics and purpose of office furniture within a business context.

Office furniture is classified as a fixed asset in accounting terms because it is a tangible asset that is utilized in the operation of a business and has a useful life extending beyond a single accounting period, typically longer than one year. Fixed assets, also known as non-current assets, include items such as property, equipment, and machinery, which are not intended for resale but rather for long-term use to generate revenue.

This classification reflects the depreciation process, where the cost of the office furniture is gradually expensed over its useful life on the income statement. Investment in office furniture is considered critical to the functionality of a business, and its value is recorded on the balance sheet as part of the organization's capital assets. The other classifications, such as current assets, leasehold improvements, and intangible assets, pertain to different categories of resources that do not accurately describe the characteristics and purpose of office furniture within a business context.