Q.Closing stock is an item of ______.

Closing stock is stock in trade held at year end and is a current asset because it is meant for sale and conversion into cash within one operating cycle.

Assets are classified by how long they are held and how quickly they turn into cash:

• Fixed assets are held long term for use in the business (machinery, buildings).
• Intangible assets have no physical form (goodwill, patents).
• Fictitious assets are not real assets at all — they are unwritten-off losses/expenses (e.g. preliminary expenses).
• Current assets are held for a short period and are readily convertible into cash — cash, debtors, bills receivable, and stock/inventory. …

Machinery is a tangible asset while the other three are intangible assets, so the odd one out is (d).

Assets are classified by physical form:

• Intangible assets have no physical existence but carry value — examples: goodwill, patents, copyrights, trademarks.
• Tangible assets have a physical form and can be seen and touched — examples: machinery, buildings, furniture, stock. …

Goodwill is an intangible asset, so the answer is (c).

Goodwill is the monetary value attached to the reputation, brand and customer loyalty of a business — the extra earning power that lets it earn more than a similar new firm. Because it cannot be seen or touched yet clearly has value, it is classified as an intangible asset.

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