Which one of the following statements is true?
A) External events (transactions) involve interactions between an entity and a party outside the entity.
B) Every event or transaction which affects an entity is identified from a source document.
C) All economic events can be reliably measured.
D) The movement of raw material into production is an external event.

Question

Quizplus · Accepted Answer

External events involve interactions between an entity and a party outside the entity. The movement of raw material into production (option D) does not necessarily involve a party outside the entity, as it could be moved by an employee within the entity. Option B is also incorrect as some transactions may not have a source document, such as adjusting entries for accruals or depreciation. Option C is incorrect as not all economic events can be reliably measured, such as the value of a brand or the impact of a natural disaster on a company's operations.

Which One of the Following Statements Is True