Question

Which of the following events is not recorded in the accounting records? Entry field with incorrect answer now contains modified data Equipment is purchased on account. A cash investment is made into the business. The declaration of cash dividends. An employee is terminated.

Answer 1

Answer:

An employee is terminated.

Explanation:

All the transactions, in a company or organisation are recorded in financial statements of the company.

For this each transaction having some numerical value, that has a monetary effect on the organisation is identified.

In the given case,

• purchase of equipment will involve direct monetary effect as cash will be paid, asset will be increased, etc:
• cash investment made, will again require cash outflow, and is presented as monetary in nature.
• Declaration of cash dividends gives existence to a liability called dividend payable, or scrips payable, and is thus, recorded in books.
• The termination of employee does not itself involve any direct monetary effect. As, the payment made or realized from such termination will be recorded in financial statements.