A pump classified as PP&E indicates which of the following?

A pump classified as PP&E indicates which of the following?

• A. Current Asset
• B. Fixed Asset
• C. Intangible Asset
• D. Inventory

Answer: (B)

In accounting, property, plant, and equipment covers long-lived, tangible assets a business uses in its operations to generate revenue. A pump is a physical device used in production or operation over multiple periods, so it fits this category as a fixed asset. It won’t be sold in the ordinary course of business, and it isn’t something you’d expect to convert into cash within a year, which is why it isn’t a current asset. It’s not intangible, since it has a physical form, and it isn’t inventory, because it’s not held for sale. Therefore, the correct classification is as a fixed asset.

In accounting, property, plant, and equipment covers long-lived, tangible assets a business uses in its operations to generate revenue. A pump is a physical device used in production or operation over multiple periods, so it fits this category as a fixed asset. It won’t be sold in the ordinary course of business, and it isn’t something you’d expect to convert into cash within a year, which is why it isn’t a current asset. It’s not intangible, since it has a physical form, and it isn’t inventory, because it’s not held for sale. Therefore, the correct classification is as a fixed asset.