What is considered a fixed asset in the context of physical inventory?

In the context of physical inventory, fixed assets refer to long-term tangible assets that a company owns and uses in its operations to generate revenue. Buildings and land are classic examples of fixed assets because they have a physical presence, are not expected to be consumed or sold in the short term, and contribute to the company's capability to conduct business over an extended period.

These assets typically require significant capital investment and are depreciated over time, reflecting their use and wear. They are essential for operations, housing equipment and personnel, and providing services or products, aligning well with the definition of fixed assets within a business context.

The other options represent different categories of assets or resources. Cash reserves are financial assets rather than physical. Raw materials are considered current assets since they are used up in production and are part of the inventory cycle. Consumable supplies, like office supplies, also fall under current assets, as they are expected to be used and replaced in a shorter time frame.