A Company Borrowed $80,000 from a Bank by Signing a Long-Term

question 166

Multiple Choice

A company borrowed $80,000 from a bank by signing a long-term note payable. The journal the transaction would be recorded in is the:

• A) Sales journal.
• B) Purchases journal.
• C) General journal.
• D) Cash disbursements journal.
• E) Cash receipts journal.

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Definitions:

Recording Error

A mistake in the bookkeeping process, where transactions are inaccurately recorded, leading to discrepancies in financial records.

Bank Reconciliation

The process of comparing and adjusting the balance shown in an entity's bank statement, with the corresponding amount shown in the entity's own accounting records.

Outstanding Checks

Checks that have been written and recorded by an entity but not yet cleared or cashed by the recipient.

Control Environment

The control environment forms part of an organization’s internal control framework, setting the tone for discipline and structure regarding the internal controls and operational processes.