Which of the Following Transactions Would not Be Considered

question 44

Multiple Choice

Which of the following transactions would not be considered an external exchange?

• A)The purchase of supplies on credit.
• B)Cash received from the issuance of common stock.
• C)Cash paid to a bank for interest on a loan.
• D)Using up insurance,which had been paid for in advance.

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Definitions:

Permanent Loss

A decrease in the value of an asset or investment that is not expected to be recovered over time.

Equity Method

A financial recording method where investments in other firms are initially noted at their purchase price and later updated to represent the investor's portion of the investee's profits or losses.

Fair-Value Method

An accounting approach where assets and liabilities are recorded at their current market values rather than their original cost.

Goodwill

An intangible asset arising when a company acquires another for a price higher than the fair market value of its net assets.