Which of the following statements is true regarding economic events?
A)The signing of a service contract is an example of an external event that is recorded in the accounting records.
B)Every event which affects an entity can be identified from a source document.
C)All internal and external events must be measured with sufficient reliability.
D)External events involve exchanges between an entity and another entity outside the company.

Question

Quizplus · Accepted Answer

External events involve exchanges between an entity and another entity outside the company. The signing of a service contract is an internal event as it does not involve an external entity. While most economic events can be identified from a source document, some events such as management decisions or changes in market conditions may not have a specific source document. Lastly, all events need to be measured with sufficient reliability to ensure accurate financial reporting.

Which of the Following Statements Is True Regarding Economic Events