Accounting Fundamentals Certification (AFC) Practice Test

Land is classified as an asset account in accounting. Assets are resources owned by a business that are expected to provide future economic benefits. Land specifically represents a long-term asset because it is not intended for immediate consumption or sale but will typically be used for operations, production, or future expansion over many years.

In accounting, asset accounts include items like cash, buildings, equipment, and inventory. The inclusion of land in the asset category emphasizes its role in contributing to a company's overall value and operational capability. Since land does not depreciate like buildings or machinery, it is treated as a unique asset that appreciates over time, reinforcing its position on the balance sheet.

Liability accounts, by contrast, represent obligations or debts that a business must pay in the future, while an expense account records costs incurred in the process of generating revenue. Revenue accounts track income earned from the sale of goods or services. None of these categories appropriately describe land, making the classification as an asset account the most suitable.