Your company places an order for inventory with suppliers for delivery in two weeks.
A)This is an internal event and it does not affect the balance sheet.
B)This is an activity that does not affect the balance sheet.
C)This is an internal event that affects the balance sheet.
D)This is an external exchange and it affects the balance sheet.

Question

Quizplus · Accepted Answer

External exchanges are exchanges involving assets,liabilities,and/or stockholders' equity between the company and someone else.An order has been placed;but the promise to pay will not occur until the supplies are delivered.An exchange of only promises is not an accounting transaction.Since no exchange has occurred,this activity would not be recorded as a transaction.

Your Company Places an Order for Inventory with Suppliers for Delivery