Final answer:
The money owed for new equipment by a veterinary practice is considered a liability, not an asset. Assets are valuable resources for the business, while liabilities are obligations to pay in the future. The correct answer is (b) False.
Step-by-step explanation:
The money owed by a veterinary practice for the purchase of new equipment is not considered an asset. Instead, it is considered a liability. When a business purchases equipment on credit, the acquired equipment is recorded as an asset on the balance sheet because it provides future economic benefits to the business. However, the obligation to pay for the equipment, i.e., the money owed, is recorded as a liability, as it represents a future outflow of resources.
An asset is something that has potential value to the business, meaning anything that can be used to generate income or can be converted into cash. A liability, on the other hand, is a present obligation that the business has to settle in the future, which indicates that resources will have to flow out of the business to settle it.
Thus, the correct answer to the question is (b) False. The purchase of new equipment would increase the assets in terms of the value of the equipment, but the money owed for the purchase is recognized as a liability since it is a debt that the practice must pay back.