Question

Nonfinancial Transaction (Def. and Ex.)

A) Financial activities not involving money.
B) Transactions with no impact on a company's balance sheet.
C) Non-monetary business operations and events.
D) Mandatory financial reporting requirements.

Answer 1

Nonfinancial transactions refer to non-monetary business operations and events that do not impact a company's balance sheet, such as inter-departmental service exchanges or inventory adjustments for spoilage.

Step-by-step explanation:

The term nonfinancial transaction refers to C) Non-monetary business operations and events. These are activities that take place within a company that do not involve the transfer of money and do not affect the company's balance sheet. An example of a nonfinancial transaction could be the exchange of services between departments within a company, where no actual money is exchanged but value is still provided and received. Another example could be the adjustment of inventory counts due to spoilage or obsolescence without monetary loss being recognized at that moment.