A Friend of the Family Has Just Received Her First

question 37

Essay

A friend of the family has just received her first set of financial statements from her accountant. When she finds out that you are an accounting major, she asks you, "Why aren't my employees listed as an asset on my company's balance sheet?"
Required:
Write an explanation describing the characteristics that an economic resource must possess in order to be considered an asset. Include in your discussion the primary reason why "human resources" are not recognized as assets.

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Definitions:

Accurate

Characterized by exactness and precision; free from errors or mistakes.

Reliable

In the context of information or data, reliable refers to the consistency and dependability of the information over time, indicating its trustworthiness or accuracy.

Accounting Information

Data related to the financial transactions and status of an organization, used for analysis, decision-making, and compliance.

Taxing Authorities

These are government agencies responsible for imposing and collecting taxes from individuals and businesses.