(Chapter 3) Problem Set 2 - Due September 21, 2007

(Chapter 3) Problem Set 2 - Due September 21, 2007 -...

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Questions 2. The following either do, or do not represent business transactions: a) “A computer is purchased on account.” Yes , this is a business transaction because an asset is bought with funds from a business, where it can hopefully be used to promote productivity, which in turn raises revenue in the long run. b) “A customer returns merchandise and is given credit on account.” Yes , this is a business transaction since the business is taking back goods that it had originally sold to an external user. c) “A prospective employee is interviewed.” No , this is not a business transaction. Even though the employee may start working for the business someday to be paid a wage, and earn revenue, this is not set in stone yet. d) “The owner of the business withdraws cash from the business for personal use.” No , this is not a business transaction as it, for the most part, does not concern the business in any way. Isn’t this also a breach of the Economic Entity Assumption? e)
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This note was uploaded on 04/04/2008 for the course ACCT 325 taught by Professor Warren during the Spring '08 term at Rutgers.

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(Chapter 3) Problem Set 2 - Due September 21, 2007 -...

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