Which of the Following Items Is Not Considered an Asset

question 36

Multiple Choice

Which of the following items is not considered an asset?

• A) patents
• B) research expenses of an R&D project
• C) equipment under lease where the risks and rewards flows into the entity
• D) research expenses of an R&D project and equipment under lease where the risks and rewards flows into the entity

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Definitions:

Unfavorable Variance

A situation where actual costs exceed the standard or budgeted costs, often indicating inefficiencies or increased expenses.

Favorable Variance

A financial term indicating that actual costs were lower or revenues were higher than planned.

Budgeted Amount

The projected costs or revenues allocated to a specific activity or period, based on estimates.

Budget Ratcheting

The practice of setting future budget allocations based on the current period’s expenditures, discouraging under-spending in fear of budget cuts.