Which type of property is defined by a normal life greater than 2 years, not consumed in use, and retains its identity as a self-contained unit?

• A. Fixed asset
• B. General purchase property
• C. Consumable item
• D. Inventory item

Answer: (B)

The type described is fixed asset. Fixed assets are long-term tangible resources used in the operation of the business that have a life extending beyond a single year, typically more than two years. They’re not consumed in use in a single period; instead, they provide service over many years and maintain their identity as separate, self-contained units. Because of this ongoing utility, they’re capitalized and depreciated over their useful life.

Consumable items are meant to be used up quickly and expensed, while inventory items are goods held for sale or for processing into sale. A term like “general purchase property” isn’t a standard classification in this framework. Hence, the property described aligns with a fixed asset.