Future Business Leaders of America (FBLA) Accounting Practice Test

Which term describes the physical items a business uses in its operations?

1. Immovable assets

2. Tangible fixed assets

3. Investment assets

4. Intangible assets

The correct answer is: Tangible fixed assets

The term that describes the physical items a business uses in its operations is "tangible fixed assets." These assets can be seen and touched, consisting of items such as machinery, buildings, land, and equipment that a company utilizes to produce goods or provide services. They are considered long-term assets because they are not easily converted into cash and are expected to provide value to the business over many years. The term "tangible" signifies that these assets have a physical presence, setting them apart from other asset categories that may not have a physical form. In contrast to other choices, immovable assets refer generally to real estate, which is a subset of tangible fixed assets. Investment assets could refer to a broader category that includes both tangible and intangible items that a business holds for income generation but does not specifically define the physical items used in operations. Intangible assets, like patents or trademarks, represent non-physical resources, further emphasizing the distinct nature of tangible fixed assets as essential for daily business operations.