Which of the following are examples of fixed capital?Multiple select question.accounts receivablebuildingmachineryinventory
Question
Which of the following are examples of fixed capital?
- accounts receivable
- building
- machinery
- inventory
Solution
To determine which of the provided options are examples of fixed capital, let's first understand the concept of fixed capital. Fixed capital refers to long-term assets that are used in the production process and are not expected to be consumed or converted into cash within a year. Fixed capital typically includes physical assets such as buildings, machinery, and equipment.
Now, let's evaluate the provided options:
-
Accounts Receivable:
- This represents money owed to a business by its customers. It is classified as a current asset, not fixed capital.
-
Building:
- A building is a long-term physical asset used in the production of goods or services. It is an example of fixed capital.
-
Machinery:
- Machinery is also a long-term asset used in the production process. It qualifies as fixed capital.
-
Inventory:
- Inventory consists of goods available for sale and is considered a current asset. It is not fixed capital.
Final Answer
The examples of fixed capital from the given options are:
- Building
- Machinery
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