Which statement accurately defines Equipment for a security interest?

• A. Equipment consists of goods other than inventory, farm products, or consumer goods.
• B. Equipment includes inventory and consumer goods used in production.
• C. Equipment is limited to fixtures attached to real property.
• D. Equipment includes crops and timber.

Answer: (A)

Under Article 9, collateral is organized into four categories: consumer goods, farm products, inventory, and equipment. Equipment is defined as goods other than inventory, farm products, or consumer goods—so it covers tangible property used in a business’s operations, like machinery, tools, office equipment, and vehicles. Crops and timber are farm products, and goods held for sale or used in production in the ordinary course are inventory, while items used for personal or household purposes are consumer goods. Therefore, the statement that equipment consists of goods other than inventory, farm products, or consumer goods is correct. The other options misstate the boundaries: equipment is not limited to fixtures attached to real property, and crops, timber, or inventory/consumer goods used in production are not classified as equipment.