The Key Characteristic Used by the Framework to Define an Asset

question 1

Multiple Choice

The key characteristic used by the Framework to define an asset is:

• A) saleability
• B) type of item
• C) ability to generate future economic benefits
• D) ability to generate future cash flows

---

Definitions:

Asset

An economic resource owned or controlled by a person or company, expected to provide future benefits.

Liability

A financial obligation or debt that an entity owes to another that must be paid in the future, such as loans, accounts payable, or mortgages.

Accounting Equation

The fundamental equation that represents the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).

Owner's Equity

The residual interest in the assets of a company after deducting its liabilities; also known as shareholders' equity.