ACC 210 EXAM 1, ACC 210 Exam 3

K2 Corporation has assets of $3,600,000, common stock of $936,000, and retained earnings of $1,158,000. What are the creditors' claims on K2's assets?

$1,506,000 (A = L + SE. $3,600,000 = L + ($936,000 + $1,158,000) L = $1,506,000)

For 2017 Fielder Corporation reported net income of $32,000; net sales $400,000; and average share outstanding 16,000. There were no preferred dividends. What was the 2017 earnings per share?

$2.00 (EPS = (net income - preferred dividends)/average number of shares ($32,000 - $0)/16,000 shares = $2.00 per share)

The Trial Balance for Winrow Company included the following balances: Cash $11,000 Prepaid insurance 500 Accounts receivable 2,500 Accounts payable 2,000 Notes payable 3,000 Common stock 5,000 Dividends 500 Revenues 23,000 Expenses 12,500 What amount did Winrow Company show as total credits?

$33,000

At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017?

$441,000 credit ($423,000 + $60,000 - $36,000 - $6,000 = $441,000)

Consider the following transactions: -Issued common stock for cash. -Purchased equipment by signing a note payable. -Paid rent for the current month. -Collected cash from customers on account. How many of these four transactions increased the given company's total assets?

2

When preparing financial statements, what is the correct order they should be prepared in? 1.Statement of Stockholders' Equity (or Statement of Retained Earnings) 2.Balance sheet 3.Income Statement

2,3,1

Allman Company recorded the following cash transactions for the year: Paid $168,000 for salaries. Paid $80,000 to purchase office equipment. Paid $20,000 for utilities. Paid $8,000 in dividends. Collected $350,000 from customers. What was Allman's net cash provided by operating activities?

200,000 (Net income = $1,160,000 revenues - $960,000 expenses = $200,000)

If management can estimate the amount of loss that will occur due to litigation against the company, and the likelihood of the loss is reasonably possible, a contingent liability should be A. Disclosed, but not reported as a liability. B. Disclosed and reported as a liability. C. Neither disclosed nor reported as a liability. D. Reported as a liability, but not disclosed.

A. Disclosed, but not reported as a liability.

At times, businesses require advance payments from customers that will be applied to the purchase price when goods are delivered or services provided. These customer advances represent: A. Liabilities until the product or service is provided. B. A component of stockholders' equity. C. Long-term assets until the product or service is provided. D. Revenue upon receipt of the advance payment.

A. Liabilities until the product or service is provided.

At the beginning of 2018, Angel Corporation began offering a 1-year warranty on its products. The warranty program was expected to cost Angel 4% of net sales. Net sales made under warranty in 2018 were $180 million. Five percent of the units sold were returned in 2018 and repaired or replaced at a cost of $5.3 million. The amount of warranty expense on Angel's 2018 income statement is: A. $5.3 million. B. $7.2 million. C. $9.0 million. D. $27.0 million.

B. $7.2 million. The estimated expense is $180 million x 4% = $7.2 million

On September 1, 2018, Daylight Donuts signed a $100,000, 9%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2019. Daylight Donuts records the appropriate adjusting entry for the note on December 31, 2018. In recording the payment of the note plus accrued interest at maturity on March 1, 2019, Daylight Donuts would A. Debit Interest Expense, $3,000. B. Debit Interest Expense, $1,500. C. Debit Interest Payable, $1,500. D. Debit Interest Expense, $4,500.

B. Debit Interest Expense, $1,500.

Which financial statement shows that accompanies resources equal claims to those resources?

Balance sheet

Region Jet has a $50 million liability at December 31, 2018, of which $10 million is payable in 2019. In its December 31, 2018 balance sheet, the company reports the $50 million debt as a: A. $50 million current liability on the balance sheet. B. $50 million long-term liability on the balance sheet. C. $10 million current liability and a $40 million long-term liability on the balance sheet. D. $40 million current liability and a $10 million long-term liability on the balance sheet.

C. $10 million current liability and a $40 million long-term liability on the balance sheet.

On September 1, 2018, Daylight Donuts signed a $100,000, 9%, six-month note payable with the amount borrowed plus accrued interest due six months later on March 1, 2019. Daylight Donuts should report interest payable at December 31, 2018, in the amount of: A. $0. B. $1,500. C. $3,000. D. $4,500.

C. $3,000. $100,000 x .09 x 4/12 (Sept - Dec) = $3,000

Which of the following is not an employer payroll cost? A. FICA taxes. B. Federal and state unemployment taxes. C. Federal and state income taxes. D. Employer contributions to a retirement plan.

C. Federal and state income taxes.

Dividends have a normal _______ balance and appear in the ______________.

Debit; Statement of Stockholders' Equity

What is DEA?

Dividends Expenses Assests

What are the two fundamental qualitative characteristics identified by the financial accounting standards Board's conceptual framework?

Relevance and faithful representation

Common Stock is an _________ account.

SE

T/F: Accounting is the process of identifying, measuring, recording, and communicating financial information about a company's business activities in order for decision-makers to make better informed decisions about the company.

True

T/F: An amount is considered to be material if its omission from or misstatement in a company's financial statements could influence a user's decision about a company.

True

T/F: Revenues are the amounts earned from the sale of products or services to customers.

True

How much will $5,000 invested at the end of each year for six years grow to, assuming an annual interest rate of 7%, compounded annually? a. $35,766. b. $36,813. c. $33,833. d. $7,504.

a. $35,766. FV of an annuity = Payment x Table 3 factor (n= 6, I = 7%): FV = $5,000 x 7.1533 = $35,766.50

At the end of the next four years, a new machine is expected to generate net cash flows of $8,000, $12,000, $10,000, and $15,000, respectively. What are the cash flows worth today if a 3% annual interest rate properly reflects the time value of money in this situation? a. $41,557. b. $47,700. c. $32,403. d. $38,108.

a. $41,557. Must "brute force" this one. Calculate separate PV's for each and add them up: $8,000 x .97087 = $7,766.96 $12,000 x .94260 = 11,311.20 $10,000 x .91514 = 9,151.40 $15,000 x .88849 = 13,327.35 $41,556.91

Seaside issues a bond with a coupon rate of 10%, face value of $50,000, and due in 5 years. Interest payments are made semi-annually. The market rate for this type of bond is 11%. What is the issue price of the bond? a. $48,116. b. $46,320. c. $51,930. d. $50,000.

a. $48,116. PV of face value = $50,000 x .58543 = $29,271.50 PV of payments = $2,500 x 7.53763 = 18,844.08 $48,115.58

Miller borrows $300,000 to be paid off in three years. The loan payments are semiannual with the first payment due in six months, and annual interest is at 6%. What is the amount of each payment? a. $55,379. b. $106,059. c. $30,138. d. $60,276.

a. $55,379. PV of an annuity = Payment x Table 4 factor (n = 6, I = 3%) $300,000 = Payment x 5.41719 Payment = $300,000/5.41719 = $55,379.26

When bonds are issued at a discount, what happens to the carrying value and interest expense over the life of the bonds? a. Carrying value and interest expense increase. b. Carrying value and interest expense decrease. c. Carrying value decreases and interest expense increases. d. Carrying value increases and interest expense decreases.

a. Carrying value and interest expense increase.

An intangible asset _____. a. derives its value from the rights and privileges it provides the owner. b. is worthless because it has no physical substance. c. is converted into a tangible asset during the operating cycle. d. cannot be classified on the balance sheet because it lacks physical substance.

a. derives its value from the rights and privileges it provides the owner.

Which underlying GAAP assumption is being violated if a company includes the personal liabilities of its owners on the company's balance sheet? a. economic entity assumption b. monetary unit assumption c. going concern assumption d. periodicity assumption

a. economic entity assumption

The double-entry bookkeeping system requires that each transaction must be recorded a. in at least two different accounts. b. in two sets of books. c. in a general journal and in a general ledger. d. first as a revenue and then as an expense.

a. in at least two different accounts (Both a debit and a credit (to different accounts) are required)

James & Younger Corporation purchased a one-year insurance policy on March 1, 2016 for $42,000 and recorded it as a Prepaid Insurance. The insurance policy is in effect from March 2016 through February 2017. If the company neglects to make the proper year-end adjusting entry: a. net income and assets will be overstated by $35,000. b. net income and assets will be understated by $35,000. c. net income and assets will be understated by $7,000. d. net income and assets will be overstated by $7,000.

a. net income and assets will be overstated by $35,000.

Information is said to possess the enhancing qualitative characteristic of ______ when independent parties can reach a consensus on the measurement of the activity. a. verifiability b. consistency c. understandability d. comparability e. timeliness

a. verifiability

What is the value today of receiving $2,500 at the end of three years, assuming an annual interest rate of 9%, compounded annually? a. $1,984. b. $1,930. c. $2,104. d. $3,238. PV = $2,500 x .77218 = $1,930.45

b. $1,930.

NoleCo issues bonds on 1/1/2017 for $92,894. The bonds have a face value of $100,000, a coupon rate of 6% and were issued when the market rate was 7%. The bonds pay interest semi-annually on 6/30 and 12/31 each year. How much interest expense will NoleCo recognize on 12/31/17? a. $3,251. b. $3,260. c. $2,794 d. $3,000. e. $3,243.

b. $3,260. New CV = $92,894 + $251 = $93,145 Interest Expense = $93,145 x .07 x 6/12 = $3,260.08

Wolfpack, Inc. retires a $40 million bond issue when the carrying value of the bonds is $36 million, but the market value of the bonds is $39 million. The entry to record the retirement will include: a. A credit of $3 million to a gain account. b. A debit of $3 million to a loss account. c. A credit of $4 million to a gain account. d. A debit of $4 million to a loss account.

b. A debit of $3 million to a loss account.

A series of equal periodic cash flows is referred to as: a. The time value of money. b. An annuity. c. The future value. d. Interest.

b. An annuity.

Which of the following is a primary user of accounting information with a direct financial interest in the business? a. Taxing authority b. Creditor c. Regulatory agency d. Labor union

b. Creditor (The two primary users of accounting information are investors and creditors.)

A bond issue with a face value of $500,000 bears interest at the rate of 8% (coupon rate). The current market rate of interest is 7%. These bonds will sell at a price that is: a. Equal to $500,000. b. More than $500,000. c. Less than $500,000. d. The answer cannot be determined from the information provided.

b. More than $500,000.

Which of the following would increase assets and increase liabilities? a. Provide services to customers on account. b. Purchase office supplies on account. c. Pay dividends to stockholders. d. Receive a utility bill but do not pay it immediately.

b. Purchase office supplies on account. (Debit Office Supplies (increase asset) and credit A/P (increase liabilities))

Which of the following accounts will reflect the account's beginning balance on the adjusted trial balance? a. Prepaid rent b. Retained earnings c. Prepaid insurance d. Unearned revenue

b. Retained Earnings

In each succeeding payment on an installment note: a. The amount of interest expense increases. b. The amount of interest expense decreases. c. The amount of interest expense is unchanged. d. The amounts paid for both interest and principal increase proportionately.

b. The amount of interest expense decreases.

The amount of sales tax collected by a retail store when making sales is a. a miscellaneous revenue for the store. b. a current liability. c. not recorded because it is a tax paid by the customer. d. recorded as an operating expense.

b. a current liability.

The operating cycle of a company is the average time that is required to go from cash to a. sales in producing revenues. b. cash in producing revenues. c. inventory in producing revenues. d. accounts receivable in producing revenues.

b. cash in producing revenues.

The operating cycle of a company is the average time that is required to go from cash to ... a. sales in producing revenues. b. cash in producing revenues. c. inventory in producing revenues. d. accounts receivable in producing revenues.

b. cash in producing revenues.

A current asset is __________. a. the last asset purchased by a business b. expected to be converted to cash or used in the business within a relatively short period of time c. usually found as a separate classification in the income statement d. an asset which is currently being used to produce a product or service.

b. expected to be converted to cash or used in the business within a relatively short period of time.

Recognition of revenue generally a. increases assets and liabilities. b. increases assets and stockholders' equity. c. increases assets and decreases stockholders' equity. d. leaves total assets unchanged.

b. increases assets and stockholders' equity. (Typically cash or A/R is debited (increased) and a revenue account is credited (increased))

Courtney Company purchased equipment for $1,800 cash. As a result of this event, a. assets increased by $1,800. b. total assets remained unchanged. c. Both assets and equity decreased by $1,800. d. equity decreased by $1,800.

b. total assets remained unchanged.

The revenue recognition principle dictates that revenue should be recognized in the accounting records: a. when cash is received b. when the performance obligation is satisfied c. at the end of the month d. in the period that income taxes are paid.

b. when the performance obligation is satisfied

Using accrual accounting, expenses are recorded and reported only: a. when they are incurred and paid at the same time. b. when they are incurred whether or not cash is paid. c. if they are paid before they are incurred. d. if they are paid after they are incurred.

b. when they are incurred whether or not cash is paid.

Davenport Inc. offers a new employee a lump-sum signing bonus at the date of employment. Alternatively, the employee can take $30,000 at the date of employment and another $50,000 two years later. Assuming the employee's time value of money is 8% annually, what lump-sum at employment date would make her indifferent between the two options? a. $60,000. b. $62,867. c. $72,867. d. $80,000.

c. $72,867. PV of $50,000 in 2 years at 8% = $50,000 x .85734 = $42,867 + $30,000 = $72,867

A corporation has which of the following set of characteristics? a. Shared control, tax advantages, increased skills and resources b. Simple to set up and maintains control with founder c. Easier to transfer ownership and raise funds, no personal liability d. Harder to raise funds and gives owner control

c. Easier to transfer ownership and raise funds, no personal liability

Which of the following is not an advantage of the corporate form of business organization? a. No personal liability b. Easy to transfer ownership c. Favorable tax treatment d. Easy to raise funds

c. Favorable tax treatment (Corporations are taxed as legal entities and then any dividend distributions are taxed again on the owner's personal tax returns)

When bonds are issued at a premium and the effective interest method is used for amortization, at each subsequent interest payment date, the cash paid is: a. Less than the interest expense. b. Equal to the interest expense. c. Greater than the interest expense. d. More than if the bonds had been sold at a discount.

c. Greater than the interest expense.

Which pair of accounts follows the rules of debit and credit in relation to increases and decreases in the same manner? a. Dividends Payable and Rent Expense b. Utilities Expense and Notes Payable c. Prepaid Insurance and Advertising Expense d. Service Revenue and Equipment

c. Prepaid Insurance and Advertising Expense (Assets and Expenses behave the same way. Debits increase balances and credits decrease balances.)

Which pair of accounts follows the rules of debit and credit in relation to how increases and decreases are recorded in the same manner? a. Dividends Payable and Rent Expense b. Utilities Expense and Notes Payable c. Prepaid Rent and Insurance Expense d. Service Revenue and Equipment

c. Prepaid Rent and Insurance Expense (Assets and expense both have normal debit balances and are increased with debits and decreased with credits)

Bonds can be secured or unsecured. Likewise, bonds can be term or serial bonds. Which is most common? a. Secured and term. b. Secured and serial. c. Unsecured and term. d. Unsecured and serial.

c. Unsecured and term.

Closing entries: a. are prepared before the financial statements. b. reduce the number of permanent accounts. c. cause the revenue and expense accounts to have zero balances. d. summarize the activity in every account.

c. cause the revenue and expense accounts to have zero balances.

Equipment costing $20,000 is purchased by paying $5,000 cash and signing a note for the balance owed. The journal entry should include a a. credit to Notes Receivable for $15,000. b. debit to Cash for $5,000. c. credit to Notes Payable for $15,000. d. credit to Equipment for $20,000.

c. credit to Notes Payable for $15,000.

Which of the following types of accounts should find its account balance reported on a company's income statement? (check all that apply) Select one or more: a. Dividend accounts b. Asset accounts c. Expense accounts d. Stock accounts (ex. Common Stock) e. Liability accounts f. Revenue accounts

c. expense accounts f. revenue accounts

Buying assets needed to operate a business is an example of a(n) a. delivering activity. b. financing activity. c. investing activity. d. operating activity.

c. investing activity.

A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the debts of the business. c. is owned by its stockholders. d. has tax advantages over a proprietorship or partnership.

c. is owned by its stockholders.

A chart of accounts for a business firm a. is a graph. b. indicates the amount of profit or loss for the period. c. lists the accounts in the general ledger. d. shows the balance of each account in the general ledger.

c. lists the accounts in the general ledger.

If an individual asset account is increased, then _____. a. there could be an equal decrease in a specific liability account b. there could be an equal decrease in stockholders' equity account c. there could be an equal decrease in another asset account d. None of these answer choices are correct.

c. there could be an equal decrease in another asset account (Must preserve the balance in A = L = SE)

Clemson Company purchased equipment for $2,400 cash. As a result of this event .... a. equity decreased by $2,400. b. assets increased by $2,400. c. total assets remained unchanged. d. Both assets and equity decreased by $2,400.

c. total assets remained unchanged. (One asset (equipment) goes up while another asset (cash) goes down by the same amount.)

Liabilities, Stockholders' Equity, and Revenue accounts have normal ________ balances.

credit

Meaning Corporation borrowed $400,000 and signed a one-year 6% note on May 31, 2017 (interest and principal due on May 31, 2018). Interest expense for the year ended December 31, 2017 was: a. $24,000. b. $18,000. c. $16,000. d. $14,000.

d. $14,000. $400,000 x .06 x 7/12 (June - December) = $14,000

At October 1, 2016, Metz Industries had an Accounts Payable balance of $140,000 (credit). During the month, the company made purchases of inventory on account of $200,000 and made payments on account of $160,000. At October 31, 2016, the Accounts Payable balance is a. $140,000 debit b. $200,000 credit c. $100,000 credit d. $180,000 credit

d. $180,000 credit $140,000 + $200,000 increase - $160,000 decrease = $180,000 balance at 10/31

Adjusting entries are made to ensure that: a. expenses are recognized in the period in which they are incurred. b. revenues are recorded in the period in which the performance obligation is satisfied. c. balance sheet and income statement accounts have correct balances at the end of an accounting period. d. All of these answer choices are correct.

d. All of these answer choices are correct.

If a company pays dividends of $10,000, a. stockholders' equity will be reduced by $10,000. b. net income will be reduced by $10,000. c. retained earnings will be reduced by $10,000. d. Both retained earnings and stockholders' equity will be reduced by $10,000.

d. Both retained earnings and stockholders' equity will be reduced by $10,000. (Dividends cause RE to decrease. A decrease in RE causes a decrease in stockholders' equity.)

If a company pays dividends of $10,000, a. stockholders' equity will be reduced by $10,000. b. net income will be reduced by $10,000. c. retained earnings will be reduced by $10,000. d. Both retained earnings and stockholders' equity will be reduced by $10,000.

d. Both retained earnings and stockholders' equity will be reduced by $10,000. (Dividends reduce Retained earnings. Since RE is a component of stockholders' equity also is reduced by this same amount.)

Which of the following is not an advantage of the corporate form of business organization? a. No personal liability b. Easy to transfer ownership c. Easy to raise funds d. Favorable tax treatment

d. Favorable tax treatment Corporate income is taxed twice—at the corporate level and at the personal level (dividend receipts are taxable)

A current asset is ___. a. the last asset purchased by a business. b. an asset which is currently being used to produce a product or service. c. usually found as a separate classification in the income statement. d. expected to be converted to cash or used in the business within a relatively short period of time.

d. expected to be converted to cash or used in the business within a relatively short period of time.

The statement of cash flows would disclose the payment of a dividend ____. a. nowhere on the statement b. in the operating activities section c. in the investing activities section d. in the financing activities section

d. in the financing activities section

The relationship between current assets and current liabilities is important in evaluating a company's a. profitability. b. solvency. c. market value. d. liquidity.

d. liquidity Both working capital (current assets - current liabilities) and the current ratio (current assets divided by current liabilities) are helpful in understanding a firm's ability to meet near-term obligations as they come due.

Intangible assets are typically a. listed directly under current assets on the balance sheet. b. not listed on the balance sheet because they do not have physical substance. c. listed as a long-term investment on the balance sheet. d. listed after property, plant, and equipment on the balance sheet.

d. listed after property, plant, and equipment on the balance sheet. (Intangible assets are typically the last category listed in the long-term asset section)

Assets, Expenses, and Dividends have normal _____ balances

debit

The Harris Company purchased equipment for $15,000 on December 1. It is estimated that annual depreciation on the computer will be $3,000. If financial statements are to be prepared on December 31, the company should make the following adjusting entry:

debit Depreciation Expense, $250; credit Accumulated Depreciation, $250

Raxon Company borrowed $50,000 from the bank signing a 6%, 3-month note on September 1. Principal and interest are payable to the bank on December 1. If the company prepares monthly financial statements, the adjusting entry that the company should make for interest on September 30, would be:

debit Interest Expense, $250; credit Interest Payable, $250 ($50,000 x .06 x 1/12 = $250 of interest expense at 9/30)

On July 1 the Fisher Shoe Store paid $24,000 to Acme Realty for 6 months rent beginning July 1. Prepaid Rent was debited for the full amount. If financial statements are prepared on July 31, the adjusting entry to be made by the Fisher Shoe Store is:

debit Rent Expense, $4,000; credit Prepaid Rent, $4,000

Greese Company purchased office supplies costing $7,000 and debited Supplies for the full amount. At the end of the accounting period, a physical count of office supplies revealed $2,500 still on hand. The appropriate adjusting journal entry to be made at the end of the period would be:

debit Supplies Expense, $4,500; credit Supplies, $4,500

The Dividends account is increased with _______ and decreased with __________.

debits; credits

NoleCo issues bonds on 1/1/2017 for $92,894. The bonds have a face value of $100,000, a coupon rate of 6% and were issued when the market rate was 7%. The bonds pay interest semi-annually on 6/30 and 12/31 each year. How much interest expense will NoleCo recognize on 6/30/17? a. $6,503. b. $6,000. c. $2,787. d. $3,000. e. $3,251.

e. $3,251. Interest Expense = $92,894 x .07 x 6/12 = $3,251.29

Which of the following is not an objective of financial reporting? (check all which apply) a. To minimize the amount of income tax the business must pay to the U.S. government. b. To guarantee that a business will be profitable. c. To provide information which helps users predict the business' future cash flows. d. To provide information which is useful to investors and creditors. e. To provide information about the businesses resources and claims against those resources. f. To prevent competitors from offering a similar product.

f. To prevent competitors from offering a similar product.

Adjusting entries are usually required before _________ ______________ are prepared.

financial statements (Adjusting entries will typically be required in order for the financial statements to accurately reflect revenues and expenses that are appropriately recognized.)

Issuing shares of stock in exchange for cash is an example of a(n) __________.

financing activity

The common characteristic possessed by all assets is a. long life b. future economic benefit c. tangible nature d. great monetary value

future economic benefit (Assets will benefit both the current and at least one future period)

The set of accounting standards and rules that many U.S. corporations follow when preparing their financial statements are called:

generally accepted accounting principles (GAAP).

The double-entry system requires that each transaction must be recorded

in at least two different accounts (We debit one account and credit a different account.)

The Dividends account is ___________ with debits and ___________ with credits.

increased; decreased

A/P, Salaries Payable are _______.

liabilities

The normal balance of any account is the ...

side which increases that account

Which group has Congress given the power to enforce the proper application of financial reporting rules for companies whose securities are publicly traded in the United States? a. the Securities and Exchange Commission (SEC) b. the International Accounting Standards Board (IASB) c. the company's outside auditors d. the Internal Revenue Service (IRS) e. the Financial Accounting Standards Board (FASB)

the Securities and Exchange Commission (SEC)

The accuracy and reliability of nformation presented in a company's annual report, including its financial statements and their accompanying notes, is primarily the responsibility of:

the company's management.

The revenue recognition principle dictates that revenue should be recognized in the accounting records:

when the performance obligation is satisfied. (Recognize revenue when it is earned. That's when you've done everything you're obligated to do.)

T/F: Dividends return back to the owners of a corporation a portion of their original contributions.

False

T/F: The cost constraint suggests that, even when the cost of providing accounting information exceeds its benefit, the financial accounting information should always be provided.

False

T/F: The primary overriding objective of financial reporting for U.S. based corporations is not decision usefulness.

False

What are 4 primary financial statements?

Income statemnt Statement of stockholders equity Balance sheet Statement of cash flows

What is LOR?

Liabilities Owner's Equity Revenues

On October 1, 2016, Freeze Company hires a new employee who will start to work on October 6. The employee will be paid on the last day of each month. Should a journal entry be made on October 1? Why or why not?

No, hiring an employee is an important event; however it is not an economic event that should be recorded