An Intangible Asset

question 189

Multiple Choice

An intangible asset

• A) does not have physical substance yet often is very valuable.
• B) is worthless because it has no physical substance.
• C) is converted into a tangible asset during the operating cycle.
• D) cannot be classified on the balance sheet because it lacks physical substance.

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Definitions:

Insurance Expense

The amount a company spends on insurance policies to cover various risks, recorded as an expense in the accounting period in which it is incurred.

Debit

An accounting entry that increases an asset or expense account, or decreases a liability or equity account.

Credit

In accounting, it refers to the entry that decreases assets or increases liabilities and equity on the company's balance sheet.

Collections

The act of seeking out the settlement of debts from businesses or individuals.