Which of the Following Statements Is True

question 103

Multiple Choice

Which of the following statements is true?

• A)Only the effects of internal transactions must be recognized and recorded in the entity's accounting system.
• B)An internal event is a transaction between an entity and its environment.
• C)Not all recognizable events are supported by a standard source document.
• D)Only the effects of external events must be recognized,measured,and recorded in an entity's accounting system.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of the business, which require the use of current assets or the creation of other current liabilities to settle.

Working Capital

The difference between a company's current assets and current liabilities, used to measure its short-term financial health and operational efficiency.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle if longer.

Current Liabilities

Financial obligations of a business that are due and payable within one year, including accounts payable, short-term loans, and other short-term debts.