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Transactions the firm conducts with a separate economic entity is classified as a _________ transaction.
An event that affects the financial position of the ompany but does not include an exhange with a separate economic entity is a ___________ transaction?
What are four examples of an External Transaction?
- 1. Selling Products to a customer
- 2. Purchasing supplies from a vendor
- 3. Paying Salaries to an employee
- 4. borrowing money from a bank
What are two examples of Internal transactions?
- 1. Using supplies on hand
- 2. earning revenues after having received cash in advance from customer
What are the six steps in measuring external transactions?
- 1. Identify Accounts: Use source documents to identify accounts afffected by an external transaction
- 2. Accounting Equation: Analyze the impact of the transaction on the accounting equation
- 3. Debit or Credit: Assess whether the transaction results in a debit or a credit to the account balance
- 4. Record: Record the transaction
- 5. Post: Post the transaction to the T-account in the general ledger
- 6. Trial Balance: prepare a trial balance