Question

Examples of internal transactions include all of the following except:

O Writing off an uncollectible account.
O Recording the expiration of prepaid insurance.
O Recording unpaid salaries.
O Paying salaries to company employees.

Answer 1

Internal transactions are financial transactions that occur within a company. Examples include writing off an uncollectible account and recording the expiration of prepaid insurance. Paying salaries to company employees is not an internal transaction.

Step-by-step explanation:

Internal transactions are financial transactions that occur within a company. They do not involve any external parties. Examples of internal transactions include writing off an uncollectible account, recording the expiration of prepaid insurance, and recording unpaid salaries.

Out of the given options, paying salaries to company employees is not an internal transaction because it involves paying money out to individuals outside the company.

Example: When a company realizes that it cannot collect a debt from a customer, it writes off the account as an uncollectible debt. This transaction is internal because it does not involve any external parties.