Fundamental Payroll Certification (FPC) Practice Exam

Which of the following is a characteristic of tangible assets?

1. Cannot be seen or touched

2. Includes intellectual property

3. Has a physical presence

4. Always depreciates over time

The correct answer is: Has a physical presence

Tangible assets are defined by their physical presence; they are items that can be seen or touched. This characteristic distinguishes them from intangible assets, which do not have a physical form. For example, buildings, machinery, and equipment are all tangible assets because they are concrete items that a business can utilize in its operations. In contrast, other options focus on different characteristics that apply either to intangible assets or provide incorrect understandings of tangible assets. The first option refers to intangible assets which cannot be physically perceived. The second option incorrectly categorizes intellectual property as a tangible asset, as it is considered an intangible asset because it represents ideas and concepts rather than physical items. The last option implies that all tangible assets must depreciate over time, which is inaccurate because some tangible assets, like land, do not depreciate.