On March 1 2022 Freeze Company Hires a New Employee

question 81

Multiple Choice

On March 1 2022 Freeze Company hires a new employee who will start to work on March 6.The employee will be paid on the last day of each month.Has an accounting transaction occurred on March 1? Why or why not?

• A)Yes the company is now obligated to pay the employee thus an accounting transaction has occurred.
• B)No hiring an employee is an important event; however it is not an accounting transaction.
• C)Yes failure to recognize the event would cause the financial statements to be misleading.
• D)No the financial position of the company has been changed however the dollar amount of the transaction is not yet known.

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Definitions:

Biodegradable Product

A product that can be broken down naturally by microorganisms over time into simpler, less harmful substances.