Question

Which of the following would be considered an operating asset in return on investment computations? Common...

Which of the following would be considered an operating asset in return on investment computations?

  • Common stock.
  • Land being held for plant expansion.
  • Accounts receivable.
  • Treasury stock.

Homework Answers

Answer #1

Accounts Receivable

Operating Assets are related with the ongoing operaions.Operating assets are those assets which are acquired for use in business operation.Such cash Cash, Accounts receivable etc.

Common Stock:

Common stocks are not asset. It is part of stockholder's equity.

Land being held for plant expansion:

Although land is asset.But this is for epansion purpose.It means this asset has not been used for genrating revenues and operating assets are only those assets which are used for the business.So, Such assets is not an operating asset.

Treasury Stock:

Treasury Stock is not asset. It is contra equity item which is reduced from Share Capital to find stockholders equity value.

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