AAMI Small Business Management Practice Test

Creating and managing financial records relies on grouping assets by whether they have physical form. Tangible assets have substance you can touch and see, while intangible assets do not and derive value from rights, contracts, or intellectual property.

Inventory, buildings, cars, and equipment all fit the tangible category because they exist physically. Inventory consists of goods held for sale, buildings are physical structures, cars are vehicles, and equipment includes machines and tools used in operations. Because they have a clear physical presence and are used in day-to-day activities, they’re classified as tangible assets.

Intangible assets, by contrast, include items like patents, trademarks, goodwill, and licenses—things that provide value without a physical form. So the statement listing those items as intangible is not correct, since they are all tangible assets.