What type of account is "Computer" classified as?

Explore NCEA Level 1 Accounting Exam preparation. Study with quizzes and multiple choice questions including hints and detailed explanations. Boost your confidence for the exam!

The classification of "Computer" as an asset is correct because assets are resources owned by an entity that are expected to bring future economic benefits. A computer provides value to a business through its ability to assist in operations, data processing, and communication, contributing to the company's overall productivity and efficiency.

In accounting, assets are divided into current and non-current categories, depending on their liquidity and the time frame for expected realization of value. Computers are typically classified as non-current assets because they are purchased with the intention of being used over a longer period, generally exceeding one year.

The other classifications—liability, expense, and investment—do not apply in this context. Liabilities represent obligations the company owes to others, expenses are costs incurred during operations, and investments refer to assets held for generating returns, but a computer does not fit into any of these definitions within the context of its primary role in a business. Thus, labeling "Computer" as an asset aligns with standard accounting principles.

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