Several Events Are Listed Below

question 142

Essay

Several events are listed below. Indicate whether each event is an external event that should be recorded as a transaction, an internal event which should be recorded as a transaction, or an event which should not be recorded. Use the following identification codes for your answers:
E - External event to be recorded as a transaction I - Internal event to be recorded as a transaction NR - An event which should NOT be recorded
_____ A An order is placed with a supplier for merchandise.
_____ B Common stock is issued to investors.
_____ C Cash sales are made.
_____ D Raw materials are entered into production.
_____ E Federal income tax returns are prepared by the company's accountant.
_____ F Bills are received for utility expenses.
_____ G Payment is received from customers to whom merchandise had been sold on credit.
_____ H Money collected from cash and credit customers is deposited in the company's checking account at a local bank.

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Definitions:

Drawings

Withdrawals of cash or other assets from a company by its owner(s) for personal use, reducing the capital account.

Economic Events

Actions or occurrences that significantly impact the financial status or operations of a business, influencing its accounting records.

Information System

An organized system for the collection, organization, storage, and communication of information; it supports data analysis and decision-making processes within an organization.

Residual Claim

A claim entitling the holder to a share of a company's income after all obligations and debts have been settled.