Which of the Following Statements Is True

question 12

Multiple Choice

Which of the following statements is true?

• A)Only the effects of internal transactions must be recognized and recorded in the accounting system.
• B)An internal transaction represents a business activity between an entity and its environment.
• C)Evidence used to record transactions affecting a business entity comes from source documents.
• D)Only the effects of external events must be recognized, measured, and recorded in an entity's accounting system.

Understand the role and structure of accounts in financial accounting.

Grasp the purpose and content of a chart of accounts.

Learn how to classify accounts in the ledger and understand their order of presentation in financial statements.

Understand the components and increase/decrease effects on stockholders' equity accounts.

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Definitions:

Testable Ideas

Concepts or hypotheses that can be empirically investigated through experimentation or observation.

Empiricism

A philosophical standpoint emphasizing evidence-based knowledge acquired through observation and experimentation.

Falsifiability

A principle stating that for a hypothesis to be scientifically valid, it must be possible to conceive an observation or an argument which could negate it.

Intuition

The ability to understand or know something immediately, based on feelings rather than facts.