Question

com/player/?assessmentRunid=65541460&context=exam&selected Languageld=24/section/9312541627536/question/65357224 nutes remaining Which of the following events cannot be quantified into monetary units and recorded as an accounting transaction? Select one alternative: the sale of store equipment. the appointment of a new public accounting firm to perform an audit. payment of income taxes. the purchase of a new computer. Reset 17 16 15 14 13 12 11 10 9 8

Answer 1

• Recording and recognition of transaction or event in accounting is based on a various concepts and conventions.
• One of the such concept is money measurement or say monetary unit concept
• According to the concept only such transactions are recorded which can be quantified into monetary unit / local currency.
• Hence correct answer is option B : appointment of the new public accounting firm to perform audit as merely appointment does not involve any transaction that includes money exchange. It's merely an event which should be disclosed subject to materiality and ecomonicbimpact of such decisions on stakeholders.
• While option A: sale of equipment involves inflow of cash i.e. in monetary transaction need to be recognised hence its not correct options
• Option c : payment of income tax involves cashoutflow ; amount of tax can be quantified in monetary unit requires transaction recording
• Option d : purchase of new equipment too involve cash outflow hence its not correct options.