Your company orders and broadcasts a 30 second advertisement during the Super Bowl for $1.2 million.It is legally obligated to pay for this service but has not yet done so.
A)This is an internal unobservable event so it does $\bold{not}$ affect the balance sheet.
B)This is an external unobservable event so it does $\bold{not}$ affect the balance sheet.
C)This is an internal observable event that affects the balance sheet.
D)This is an external observable event that affects the balance sheet.

Question

Quizplus · Accepted Answer

This is considered an external observable event because it involves a transaction with an entity outside the company (the broadcaster of the Super Bowl advertisement), and it affects the balance sheet by creating a liability (the obligation to pay $1.2 million) and an expense (the cost of the advertisement).

Your Company Orders and Broadcasts a 30 Second Advertisement During not\bold{not}not

Your Company Orders and Broadcasts a 30 Second Advertisement During $\bold{not}$