Many events are linked to a source document. The following is a list of events that occurred in an entity:
a. Paid a security deposit and six months’ rent on a building.
b. Hired three employees and agreed to pay them $400 per week.
c. Provided services to a customer for cash.
d. Reported a fire that destroyed a billboard that is on the entity’s property and that is owned and maintained by another entity.
e. Received payment of bills from customers.
f. Purchased stock in another entity to gain some control over it.
g. Signed a note at the bank and received cash.
h. Contracted with a cleaning service to maintain the interior of the building in good repair. No money is paid at this time.
Required
For each item (a) through (h), indicate whether the event should or should not be recorded in the entity’s accounts. For each item that should be recorded in the entity’s books:
1. Identify one or more source documents that are generated from the event.
2. Identify which source document would be used to record an event when it produces more than one source document.
3. For each document, identify the information that is most useful in recording the event in the accounts.