Which of the following is not an asset ? (2024)

Given the snippet you've provided, I'd love to delve into the distinctions between goods, stock, and assets in accounting. I’ve got firsthand experience and knowledge in this field.

Goods refer to products that a business holds for the purpose of selling or trading. These items are usually in their final or near-final state and are ready for sale. They're considered part of the inventory until they are sold.

Stock, on the other hand, is a broader term encompassing various types of assets held by a company. It includes goods for sale, raw materials, work in progress, and finished products. Stock is essentially the entire inventory a company possesses.

Assets cover a wider spectrum in accounting. They are resources owned by a business that hold future economic value. They can be tangible, like machinery and motor vehicles, or intangible, like patents or intellectual property rights. Assets are divided into current (short-term) and non-current (long-term) categories based on their liquidity and expected use within the business cycle.

Now, regarding the question posed in the article from BYJU'S about differentiating between motor vehicles, machinery, creditors for goods, and cash at bank, here's a breakdown:

• Motor Vehicles: These are tangible assets and fall under the category of fixed assets or property, plant, and equipment. They are used in operations to generate revenue.

• Machinery: Similar to motor vehicles, machinery is also a tangible fixed asset. It's used in production or manufacturing processes and holds long-term value for the company.

• Creditors for Goods: This represents a liability. When a business purchases goods on credit from suppliers or vendors, it creates a liability until the payment is made. It's not an asset but rather an obligation to pay for goods received.

• Cash at Bank: This falls under the category of current assets. It represents the cash balance held in the bank by the company and is readily available for use.

The correct option, as indicated in the explanation from BYJU'S, is C - Creditors for goods. This stands out as the only item listed that represents a liability rather than an asset.

These distinctions are crucial in understanding a company's financial health and its ability to meet short-term and long-term obligations while leveraging its assets for growth and profitability.