Concept explainers
External events:
External events are the events which involves an exchange transaction between the two parties, which is between a company, and another entity. Examples of external transactions include borrowing of cash from bank, purchase of inventory, and sale to a customer.
There are six steps involved to measure the external transaction. They are as follows:
Step1: Identify the accounts that are affected by an external transaction using the source documents.
Step 2: Impact of the transactions on the
Step 3: Transaction which results in a debit or credit to account balances should be assessed.
Step 4: The assessed transactions which are resulted in debit or credit is then recorded in journal.
Step 5: The transactions which are recorded in journal are posted to the general ledger.
Step 6: At last, the
To Write: A memo to the instructor describing each step of the six-step measurement process for each of the three transactions.
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Financial Accounting
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