State BPA Fundamental Accounting Practice Exam

How is a Truck classified in accounting?

1. Asset

2. Liability

3. Equity

4. Expense

The correct answer is: Asset

In accounting, a truck is classified as an asset because it represents a resource that a company owns and can provide future economic benefits. Assets are tangible items that a business utilizes to generate revenue and support operations. Trucks specifically can be used for transportation of goods and services, thereby contributing to the production capacity and efficiency of the business. This classification is rooted in the understanding that assets, including vehicles like trucks, contribute to the overall value of the company's balance sheet. As physical, owned items, they fall under the category of plant, property, and equipment, which are often listed in a firm's long-term assets section. By categorizing the truck as an asset, businesses can also account for its depreciation over time, reflecting its declining value as it is used in operations.