Which of the following would most likely appear as an asset on the balance sheet of a healthcare organization?

• A. Salaries owed to employees
• B. Common stock
• C. Equipment purchased for use over the next five years
• D. The outstanding balance on a loan

Answer: (C)

Assets on the balance sheet are resources the organization owns that will provide future economic benefits. The item described as equipment purchased for use over the next five years fits this definition because it represents a tangible resource that the healthcare organization will use in its operations over a multi-year period and that will be contributed to its earnings over time through depreciation. In accounting terms, such equipment is recorded as a long-term asset (property, plant, and equipment) at cost and then gradually expensed via depreciation.

Salaries owed to employees are obligations the organization must settle, so they appear as liabilities. The outstanding balance on a loan is also a liability, representing money that must be repaid. Common stock is equity, reflecting ownership interests, not a resource the organization owns for future benefit.