Question

During the past month, Pinnacle Corporation purchased a new delivery truck, sold an empty warehouse to another company, met with an existing client to discuss possible extension of a sales contract, and paid its mortgage and utility bills. Of these events, which would not be recorded in Pinnacle’s accounting records?

Answer 1

• The meeting with an existing client to discuss possible extension of a sales contract would not be recorded in Pinnacle's acccounting records.

Step-by-step explanation:

Only events that modify the monetary value of the financial accounts can be recorded in the accounting records of the companies.

The financial accounts include assets (what the company owns) and liabilities (debts and capital that belong to the stock owners).

The purchase of a new delivery truck, modifiies both the assets account and the cash or the payable accounts; hence this must be recorded.

The sale of an empty warehouse to another company modifies both the fixed assets and the cash (it it was paid in cash); thus, this must be recorded.

A meeting with an existing client to discuss possible extension of a sales contract, has not a monetary impact; so, it must not be recorded.

Paying mortgage and utility bills sure has a monetary effect, modifying some financial accounts; therefore, it must be recorded.