Question

Alice Roanoke has decided to start an Internet business to provide expert financial advice to customers who sign up and pay a monthly fee. She hires Matt Showalter, a renowned expert in setting up investment strategies. She rents a building, paying for the next two years in advance. She also buys several large computers and a small library of books on investing and providing financial advice. Which of the following is not an asset to her new company?

a. Having Showalter as an employeeb. Owning the investment booksc. Paying the rent on the building for the subsequent two-year period d. Acquiring the computers

Answer 1

Having Matt Showalter as an employee, although valuable for Alice Roanoke's company, does not constitute an asset on a balance sheet; instead, employees are generally accounted for as an operating expense. Option A

Step-by-step explanation:

Alice Roanoke's decision to start an Internet business and gather resources for it involves understanding what constitutes an asset. Assets are valuable resources controlled by a company that are expected to provide future economic benefits. Let's analyze the options provided:

Hiring Matt Showalter as an employee is an advantage because of his expertise, but an employee is not considered an asset on the balance sheet. Rather, human resources are part of the operating expenses.

Owning investment books is an asset because these books are tangible property the company owns and can use for reference or licensing.

Prepaying rent on the building for the subsequent two years is considered a prepaid asset, which will be used over the rent period.

Acquiring computers is an asset as they are tangible property that supports the company's operations and provides value over time.

Based on the information provided, the correct answer is that having Showalter as an employee is not an asset to her new company in the accounting sense because employees, while valuable, are not considered assets in financial statements. Option A