Question

Which of the following transactions for Bill's Fish 'n Chips restaurant would be treated as an accounting transaction? A) Bill distributed coupons to local hotels for 10% off and requested that the coupons be distributed to hotel guests. B) Bill spoke to a local high school about the rewards and challenges of being an entrepreneur. C) Bill signed an agreement with a local fisherman to purchase 20 pounds of halibut each month. D) Bill purchased a fryer and a dishwasher, which will be paid for next month.

Answer 1

Answer: Option D) Bill purchased a fryer and a dishwasher, which will be paid for next month.

An accounting transaction is a business event that has a monetary effect on the financial position of an organization. The purchase of the fryer and dishwasher is an event which increases the assets of the business while creating a corresponding liability which would be settled in the next month when paid. Hence, option D would be treated as an accounting transaction.

Options A, B, and C do not result in a change in the financial position of Bill’s Fish n Chips and are hence not treated as accounting transactions.