CHAPTER 2
THE ACCOUNTING INFORMATION SYSTEM
IFRS questions are available at the end of this chapter.
TRUE/FALSE
1. All liability accounts and stockholders’ equity accounts are increased on the credit side
and decreased on the debit side.
Ans: F, LO: 1, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
2. In general, debits refer to increases in account balances, and credits refer to decreases.
Ans: F, LO: 1, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
3. A ledger is where a company first records transactions and other selected events.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
4. An example of an internal transaction would be a flood that destroyed a portion of a
company's inventory.
Ans: F, LO: 2, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
5. The first step in the accounting cycle is the journalizing of transactions and other
selected events.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
6. One purpose of a trial balance is to prove that debits and credits are equal in the
general ledger.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
7. A general journal chronologically lists transactions and other events, expressed in terms
of debits and credits to accounts.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
FinancialRecord Keeping, IFRS: None
8. If a company fails to post one of its journal entries to its general ledger, the trial balance
will not show an equal amount of debit and credit balance accounts.
Ans: F, LO: 2, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
9. Adjusting entries for prepayments record the portion of the prepayment that represents
the expense incurred or the revenue to be recognized in the current accounting period.
Ans: T, LO: 3, Bloom: K, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
,2-2 Test Bank for Intermediate Accounting, Eighteenth Edition
10. An adjustment for salaries and wages expense, earned but unpaid at year-end, is an
example of an accrued expense.
Ans: T, LO: 3, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
11. The book value of any depreciable asset is the difference between its cost and its
salvage value.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
12. An accrued expense is an expense that has been incurred but not yet paid or recorded.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
13. An accrued revenue is recorded with a debit to a deferred revenue account and a credit
to a revenue account.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
14. Nominal (temporary) accounts are revenue, expense, and dividend accounts and are
periodically closed.
Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
15. Real (permanent) accounts are revenue, expense, and dividend accounts and are
periodically closed.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
16. The ending retained earnings balance is reported on both the retained earnings
statement and the balance sheet.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
17. The post-closing trial balance consists of asset, liability, stockholders’ equity, revenue,
and expense accounts.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
18. It is not necessary to post the closing entries to the ledger accounts because new
revenue and expense accounts will be opened in the subsequent accounting period.
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
19. The retained earnings balance reported on the balance sheet has been updated for the
current period’s earnings and dividends.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
20. Financial statements are prepared from the adjusted trial balance.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
, The Accounting Information System 2-3
21. An income statement for a merchandising company classifies amounts into categories
including gross profit on sales, income from operations, and income before taxes.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
22. Gross profit on sales is computed by subtracting operating expenses from sales
revenue.
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
23. The Cost of Goods Sold account is closed with a debit to Cost of Goods Sold and a
credit to Income Summary
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
*24. The accrual-basis of accounting recognizes revenue when the performance obligation is
satisfied and expenses when cash is paid.
Ans: F, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, AICPA PC:
None, IMA: Reporting & Control: Financial Statement Preparation, IFRS: None
*25. Reversing entries are made at the end of the accounting cycle to correct errors in the
original recording of transactions.
Ans: F, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
*26. An adjusted trial balance that shows that the equality of debit and credit columnar totals
proves the accuracy of the adjusting entries.
Ans: F, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
MULTIPLE CHOICE—Conceptual
27. Factors that shape an accounting information system include the
a. nature of the business.
b. size of the firm.
c. volume of data to be handled.
d. All of these answer choices are correct.
Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Technology & Analytics:
Information Systems, IFRS: None
28. The double-entry accounting system means that
a. each transaction is recorded with two journal entries.
b. each item is recorded in a journal entry, then in a general ledger account.
c. the dual effect of each transaction is recorded with a debit and a credit.
d. revenue is recorded when the performance obligation is satisfed and when the cash is
collected.
Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
29. Debit always means
a. the right side of an account.
, 2-4 Test Bank for Intermediate Accounting, Eighteenth Edition
b. an increase.
c. a decrease.
d. the left side of an account.
Ans: d, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
30. Stockholders’ equity is not affected by all
a. cash receipts.
b. dividends.
c. revenues.
d. expenses.
Ans: a, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
31. The accounting equation must remain in balance
a. throughout each step in the accounting cycle.
b. only when journal entries are recorded.
c. only at the time the trial balance is prepared.
d. only when formal financial statements are prepared.
Ans: a, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
32. The difference between the accounting process and the accounting cycle is that
a. the accounting process results in the preparation of financial statements, while the
accounting cycle is concerned with recording business transactions.
b. the accounting cycle represents the steps taken to accomplish the accounting
process.
c. the accounting process represents the steps taken to accomplish the accounting
cycle.
d. merely semantic, because both concepts refer to the same thing.
Ans: b, LO: 1, Bloom: C, Difficulty: Difficult, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
33. The process of transferring figures from the book of original entry to the ledger accounts is
called
a. adjusting.
b. balancing.
c. ledgering.
d. posting.
Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
34. When a corporation pays a note payable and interest,
a. the account notes payable will be increased.
b. the account interest expense will be decreased.
c. notes payable and interest expense will be debited.
d. cash will be debited.
Ans: c, LO: 1, Bloom: AP, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
35. The debit and credit analysis of a transaction normally takes place
a. before an entry is recorded in a journal.
b. when the entry is posted to the ledger.
THE ACCOUNTING INFORMATION SYSTEM
IFRS questions are available at the end of this chapter.
TRUE/FALSE
1. All liability accounts and stockholders’ equity accounts are increased on the credit side
and decreased on the debit side.
Ans: F, LO: 1, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
2. In general, debits refer to increases in account balances, and credits refer to decreases.
Ans: F, LO: 1, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
3. A ledger is where a company first records transactions and other selected events.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
4. An example of an internal transaction would be a flood that destroyed a portion of a
company's inventory.
Ans: F, LO: 2, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
5. The first step in the accounting cycle is the journalizing of transactions and other
selected events.
Ans: F, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
6. One purpose of a trial balance is to prove that debits and credits are equal in the
general ledger.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
7. A general journal chronologically lists transactions and other events, expressed in terms
of debits and credits to accounts.
Ans: T, LO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
FinancialRecord Keeping, IFRS: None
8. If a company fails to post one of its journal entries to its general ledger, the trial balance
will not show an equal amount of debit and credit balance accounts.
Ans: F, LO: 2, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
9. Adjusting entries for prepayments record the portion of the prepayment that represents
the expense incurred or the revenue to be recognized in the current accounting period.
Ans: T, LO: 3, Bloom: K, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
,2-2 Test Bank for Intermediate Accounting, Eighteenth Edition
10. An adjustment for salaries and wages expense, earned but unpaid at year-end, is an
example of an accrued expense.
Ans: T, LO: 3, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
11. The book value of any depreciable asset is the difference between its cost and its
salvage value.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
12. An accrued expense is an expense that has been incurred but not yet paid or recorded.
Ans: T, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
13. An accrued revenue is recorded with a debit to a deferred revenue account and a credit
to a revenue account.
Ans: F, LO: 3, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
14. Nominal (temporary) accounts are revenue, expense, and dividend accounts and are
periodically closed.
Ans: T, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
15. Real (permanent) accounts are revenue, expense, and dividend accounts and are
periodically closed.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
16. The ending retained earnings balance is reported on both the retained earnings
statement and the balance sheet.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
17. The post-closing trial balance consists of asset, liability, stockholders’ equity, revenue,
and expense accounts.
Ans: F, LO: 4, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
18. It is not necessary to post the closing entries to the ledger accounts because new
revenue and expense accounts will be opened in the subsequent accounting period.
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
19. The retained earnings balance reported on the balance sheet has been updated for the
current period’s earnings and dividends.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
20. Financial statements are prepared from the adjusted trial balance.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
, The Accounting Information System 2-3
21. An income statement for a merchandising company classifies amounts into categories
including gross profit on sales, income from operations, and income before taxes.
Ans: T, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
22. Gross profit on sales is computed by subtracting operating expenses from sales
revenue.
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
23. The Cost of Goods Sold account is closed with a debit to Cost of Goods Sold and a
credit to Income Summary
Ans: F, LO: 4, Bloom: C, Difficulty: Moderate, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Statement Preparation, IFRS: None
*24. The accrual-basis of accounting recognizes revenue when the performance obligation is
satisfied and expenses when cash is paid.
Ans: F, LO: 6, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Measurement Analysis and Interpretation, AICPA PC:
None, IMA: Reporting & Control: Financial Statement Preparation, IFRS: None
*25. Reversing entries are made at the end of the accounting cycle to correct errors in the
original recording of transactions.
Ans: F, LO: 7, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
*26. An adjusted trial balance that shows that the equality of debit and credit columnar totals
proves the accuracy of the adjusting entries.
Ans: F, LO: 8, Bloom: K, Difficulty: Easy, Min: 1, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Statement Preparation, IFRS: None
MULTIPLE CHOICE—Conceptual
27. Factors that shape an accounting information system include the
a. nature of the business.
b. size of the firm.
c. volume of data to be handled.
d. All of these answer choices are correct.
Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Technology & Analytics:
Information Systems, IFRS: None
28. The double-entry accounting system means that
a. each transaction is recorded with two journal entries.
b. each item is recorded in a journal entry, then in a general ledger account.
c. the dual effect of each transaction is recorded with a debit and a credit.
d. revenue is recorded when the performance obligation is satisfed and when the cash is
collected.
Ans: c, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
29. Debit always means
a. the right side of an account.
, 2-4 Test Bank for Intermediate Accounting, Eighteenth Edition
b. an increase.
c. a decrease.
d. the left side of an account.
Ans: d, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
30. Stockholders’ equity is not affected by all
a. cash receipts.
b. dividends.
c. revenues.
d. expenses.
Ans: a, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
31. The accounting equation must remain in balance
a. throughout each step in the accounting cycle.
b. only when journal entries are recorded.
c. only at the time the trial balance is prepared.
d. only when formal financial statements are prepared.
Ans: a, LO: 1, Bloom: C, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
32. The difference between the accounting process and the accounting cycle is that
a. the accounting process results in the preparation of financial statements, while the
accounting cycle is concerned with recording business transactions.
b. the accounting cycle represents the steps taken to accomplish the accounting
process.
c. the accounting process represents the steps taken to accomplish the accounting
cycle.
d. merely semantic, because both concepts refer to the same thing.
Ans: b, LO: 1, Bloom: C, Difficulty: Difficult, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
33. The process of transferring figures from the book of original entry to the ledger accounts is
called
a. adjusting.
b. balancing.
c. ledgering.
d. posting.
Ans: d, LO: 1, Bloom: K, Difficulty: Easy, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting & Control:
Financial Record Keeping, IFRS: None
34. When a corporation pays a note payable and interest,
a. the account notes payable will be increased.
b. the account interest expense will be decreased.
c. notes payable and interest expense will be debited.
d. cash will be debited.
Ans: c, LO: 1, Bloom: AP, Difficulty: Moderate, Min: 2, AACSB: None, AICPA BC: None, AICPA AC: Reporting, AICPA PC: None, IMA: Reporting &
Control: Financial Record Keeping, IFRS: None
35. The debit and credit analysis of a transaction normally takes place
a. before an entry is recorded in a journal.
b. when the entry is posted to the ledger.
