What is a key characteristic of capital assets?

A key characteristic of capital assets is that they are used over an extended period. This means that capital assets, such as property, machinery, buildings, and equipment, are not consumed in a single accounting period but rather provide value and utility to an organization over several years. This feature differentiates capital assets from current assets, which are typically short-term and expected to be converted into cash or consumed within a year.

The other options do not accurately describe capital assets. For instance, being liquid refers to the ease with which an asset can be converted into cash, which is not a characteristic of capital assets, as they are often less liquid due to their long-term nature. Furthermore, capital assets are not typically considered short-term investments since they are intended for long-term use and can incur depreciation over time. Lastly, while capital assets may include physical assets, they can also encompass intangible assets, such as patents and trademarks, thereby expanding the scope beyond just physical items. Thus, the defining characteristic of capital assets being used over an extended period aligns with their nature in financial planning and management.