Deck 7: Accounting Information Systems

Question 1

Source documents:

A)Are input devices.
B)Provide the basic information processed by an accounting system.
C)Cannot be electronic files or web communications.
D)Store processed information for future use.
E)Convert information to the system's processing component.

Answer 1

B

Question 2

Which of the following accounting principles prescribes that an accounting information system report useful,understandable,timely,and pertinent information for effective decision-making?

A)Control principle.
B)Compatibility principle.
C)Relevance principle.
D)Flexibility principle.
E)Cost-Benefit principle.

Answer 2

C

Question 3

A record that contains detailed information on specific accounts with a common characteristic and is support for a controlling account is a(n):

A)Subsidiary ledger.
B)General ledger.
C)Special ledger.
D)All-purpose ledger.
E)Column balance ledger.

Answer 3

A

Question 4

Which of the following statements regarding accounting information systems is not true?

A)Accounting information systems consist of people,records,methods,and equipment.
B)Accounting information systems are more important than ever to decision makers.
C)Accounting information systems cannot improve on a company's competitive edge.
D)Accounting information systems are designed to provide output including financial,managerial,and tax reports.
E)Accounting information systems are designed to capture information about a company's transactions.

Question 5

Which of the following is not a special journal:

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

Question 6

Which of the following is not a feature of special journals?

A)They are efficient tools in helping journalize and post transactions.
B)They allow posting of amounts as column totals rather than as individual amounts.
C)Good system design could collapse sales and cash receipts into one journal to better suit a business.
D)They eliminate the need for a general journal.
E)They produce an efficient division of labor.

Question 7

Which of the following statements is not true regarding internal control procedures?

A)Internal control procedures are designed to ensure reliable financial reports.
B)Internal control procedures are designed to safeguards company assets.
C)Internal control procedures direct operations toward common goals.
D)Internal control procedures include methods to achieve compliance with laws and regulation.
E)Internal control procedures are not affected by the cost-benefit principle.

Question 8

Information processors are systems that:

A)Keep data in an accessible form.
B)Interpret,transform,and summarize information for use in analysis and reporting.
C)Eliminate the need for professional judgment due to their accuracy.
D)Are the means to make information available to users.
E)Capture information from source documents.

Question 9

Which of the following is not an output device?

A)Printers.
B)Monitors.
C)Projectors.
D)Web communications.
E)Bar code readers.

Question 10

The control principle for accounting information systems requires that the:

A)Benefits from an activity outweigh the costs of the activity.
B)System report useful,understandable,timely,and pertinent information for effective decision making.
C)System must have methods and procedures allowing managers to control and monitor business activities.
D)System be able to adjust to changes in the company,business environment,and needs of decision makers.
E)System conforms to a company's activities,personnel,and structure.

Question 11

A journal that is used to record and post transactions of a similar type is a(n):

A)Perpetual journal.
B)Columnar journal.
C)Special journal.
D)General journal.
E)All-purpose journal.

Question 12

When a company uses special journals,the general journal is used to record selected transactions and events including:

A)Closing entries.
B)Sales on credit.
C)Cash payments.
D)Credit purchases.
E)Credit sales.

Question 13

The purchases journal is used for recording:

A)Credit purchases.
B)Credit sales.
C)Cash sales.
D)Cash purchases.
E)Cash disbursements.

Question 14

The five fundamental principles of accounting information systems are:

A)Control,accountability,relevance,compatibility,and flexibility.
B)Historical cost,relevance,compatibility,flexibility,and cost-benefit.
C)Control,relevance,compatibility,flexibility,and safety.
D)Historical cost,relevance,compatibility,timeliness,and cost-benefit.
E)Control,relevance,compatibility,flexibility,and cost-benefit.

Question 15

The sales journal is used for recording:

A)Credit purchases.
B)Credit sales.
C)Cash sales.
D)Cash purchases.
E)Cash receipts.

Question 16

The basic components of an accounting information system include all of the following except:

A)Source documents.
B)Warehouses.
C)Information processors.
D)Information storage.
E)Output devices.

Question 17

Input devices include:

A)Scanners.
B)Printers.
C)Software.
D)Ledgers.
E)Information processors.

Question 18

The flexibility principle of accounting information systems prescribes that the:

A)Benefits from an activity in the system outweigh the costs of the activity.
B)System report useful,understandable,timely,and pertinent information for effective decision making.
C)System aid managers in controlling and monitoring business activities.
D)System be able to adapt to changes in the company,business environment,and needs of decision makers.
E)System conforms to a company's activities,personnel,and structure.

Question 19

Which of the following statements regarding accounting information systems is not true?

A)Accounting information systems collect and process data from transactions and events.
B)Accounting information systems organize data in useful forms.
C)Accounting information systems are not subject to internal control policies.
D)Accounting information systems are useful to effective decision making.
E)Accounting information systems communicate information to business decision makers.

Question 20

Information storage databases:

A)Eliminate the need for professional judgment.
B)Are relied on by auditors of the financial statements.
C)Should not be cloud based.
D)Capture information from source documents.
E)Need not be accessible once data is processed.

Question 21

Subsidiary ledgers do all of the following except:

A)Remove excessive detail from the general ledger.
B)Provide up-to-date information on customer or other specific account balances.
C)Aid in error identification for individual accounts.
D)Help with division of labor (recordkeeping tasks).
E)Eliminate the need for individual postings to the customer or supplier accounts.

Question 22

Alani's Hawaiian segment had revenues of $2,075 million,operating income of $1,500 million,and average assets of $1,450 million.The Hawaiian segment return on assets is:

A)72.3%
B)69.9%
C)103.4%
D)96.7%
E)138.3%

Question 23

When posting the sales journal's activity at the end of the month,its totals are:

A)Debited to Sales and credited to Accounts Receivable.
B)Debited to Accounts Receivable and credited to Cash.
C)Debited to Cash and credited to Accounts Receivable.
D)Debited to Accounts Receivable and credited to Sales.
E)Debited to Cash and credited to Sales.

Question 24

Which of the following is not true about enterprise resource planning (ERP)software:

A)ERP refers to programs that help manage a company's vital operations.
B)ERP can include programs that extend from order taking to manufacturing to accounting.
C)ERP can speed up business decision making and help reduce costs.
D)ERP cannot be used to share data with customers and suppliers.
E)ERP can be designed to link every part of a company's operations.

Question 25

Doughton Furniture Company purchased merchandise on credit from Furniture Supply for $8,000.Two days later Doughton returned $2,000 of the merchandise due to damage.Doughton would record the return of merchandise in the:

A)General journal.
B)Cash receipts journal.
C)Cash disbursements journal.
D)Purchases journal.
E)Accounts Payable controlling account.

Question 26

Chandler Company sold merchandise on credit to Jamie Morgan for $700 and the cost of the merchandise was $290.Chandler would record this sale in the:

A)General journal.
B)Cash receipts journal.
C)Sales journal.
D)General ledger.
E)Accounts Receivable controlling account.

Question 27

An accounts receivable ledger is a:

A)Subsidiary ledger that contains an account for each supplier (creditor).
B)List of the separate accounts that show the balances outstanding from credit customers.
C)Book of original entry that is designed and used for recording only sales on credit.
D)Ledger that contains all financial statement accounts of a business.
E)Subsidiary ledger that contains a separate account for each party that grants both short-term and long-term credit on account to the company.

Question 28

An accounts payable ledger:

A)Contains an account for each credit customer.
B)Lists the balances of selected accounts that are added to show the total amount of the significant long-term creditors outstanding.
C)Is a book of original entry designed and used for recording only a specified type of transaction.
D)Contains the financial statement accounts of a business.
E)Contains a separate account for each creditor (supplier)to the company.

Question 29

The Accounts Payable controlling account:

A)Is not included in a company's chart of accounts.
B)Stores the transaction data of individual supplies.
C)Reduces the number of entries in the general journals.
D)Equals the sum of all balances of supplier accounts.
E)Increases the number of columns in the journals.

Question 30

Examples of other subsidiary ledgers besides those for accounts receivable and accounts payable may include all of the following except:

A)Equipment.
B)Cash.
C)Payroll.
D)Inventory.
E)Investments.

Question 31

The segment return on assets:

A)Is applicable whether segments earn profits or losses.
B)Reflects on the profitability of a segment.
C)Is difficult to calculate because companies with traded stock are not required to report segment information.
D)Is calculated as segment average assets divided by segment operating income.
E)Is calculated as segment sales divided by segment average assets.

Question 32

Enterprise-resource planning software:

A)Refers to programs that help manage a company's vital operations.
B)Is another name for spreadsheet programs.
C)Uses batch processing of business information.
D)Is substantially declining in use.
E)Is another name for database programs.

Question 33

A business segment is part of a company that:

A)Requires only internal reporting.
B)Is separately identified by its products,services,or geographic market.
C)Requires special journals.
D)Requires subsidiary ledgers.
E)Cannot report its results separately.

Question 34

Chandler Company purchased merchandise on credit from Lighting Supply for $5,600.Chandler would record this sale in the:

A)General journal.
B)Cash receipts journal.
C)Cash disbursements journal.
D)Purchases journal.
E)Accounts Payable controlling account.

Question 35

Doughton Furniture Company purchased merchandise on credit from Furniture Supply for $8,000.Two days later Doughton returned $2,000 of the merchandise due to damage.When Doughton pays for the merchandise minus the return,it would record the payment in the:

A)General journal.
B)Cash receipts journal.
C)Cash disbursements journal.
D)Purchases journal.
E)Accounts Payable controlling account.

Question 36

Assume that a company uses special journals for sales,purchases,cash receipts,and cash disbursements.A sales return for credit on account would be recorded in the:

A)Sales journal.
B)General journal.
C)Cash receipts journal.
D)Direct posting journal.
E)Cash disbursements journal.

Question 37

A subsidiary ledger that contains a separate account for each supplier (creditor)to the company is a(n):

A)Controlling account.
B)Accounts receivable ledger.
C)Accounts payable ledger.
D)General ledger.
E)Special journal.

Question 38

A subsidiary ledger:

A)Includes transactions not covered by special journals.
B)Is a listing of all of the accounts of a business.
C)Is a listing of individual accounts and amounts with a common characteristic.
D)Is also called a general ledger.
E)Is also called a special journal.

Question 39

The accounts receivable ledger:

A)Is a substitute for the sales journal.
B)Stores transaction data for individual customers.
C)Stores transaction data for individual creditors.
D)Is a substitute for the cash receipts journal.
E)Is also the controlling account.

Question 40

An approach that enters and processes data into the accounting system as soon as source documents are available is called:

A)Date storage.
B)Batch processing.
C)Online processing.
D)Computer programming.
E)Web communications.

Question 41

Which of the following journals would a company use to record period-end adjusting entries to accrue revenues?

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

Question 42

For a retailer required to collect sales taxes from customers,all of the following adaptations would be made to the sales journal except:

A)Column totals would continue to be posted as usual.
B)A Sales Taxes Payable credit column would be added.
C)There would be a separate Accounts Receivable debit column.
D)A Sales Taxes Payable debit column would be added.
E)There would be a separate Sales credit column.

Question 43

A company would use which of the following journals to record cash payments?

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

Question 44

The process of adding the Debit column totals,then the credit column totals of a journal and comparing the two sums for equality is an example of:

A)Crossfooting.
B)Footing.
C)Journalizing.
D)Posting.
E)Reconciling.

Question 45

If a company purchases $15,200 of merchandise on credit,which journal will the transaction be recorded in?

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

Question 46

Flavor Ice Cream received a payment of $7,800 from a credit customer within the discount period.Identify the journal the transaction would be recorded in.

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

Question 47

A company sells merchandise on credit for $6,000.The merchandise cost is $3,400.The journal that the transaction would be recorded in is the:

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

Question 48

Assume that a company using a purchases journal made an error in totaling the journal's accounts payable column.The error should be discovered:

A)When the purchases journal is posted to the general ledger.
B)When the sum of the vendor accounts does not equal the balance in the Purchases journal.
C)When the total of the schedule of accounts payable is compared with the balance of the Accounts Payable account.
D)When the creditors receive their payments.
E)When the financial statements are prepared.

Question 49

A company makes a payment of $5,000 on a long-term note payable.The journal the transaction would be recorded in is the.

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

Question 50

Which of the following statements regarding input devices is not true?

A)Input devices capture information from source documents and enable its transfer to the system's information processing component.
B)Input devices convert data on source documents from written form to a form usable for the system.
C)Input devices include keyboards,scanners,and modems.
D)Input devices include journal entries.
E)Input devices make accounting system information available to users.

Question 51

Which of the following journals would a company use to record a merchandise return?

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

Question 52

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

Question 53

A list of all the accounts in the accounts receivable ledger with their balances and the total is a:

A)Schedule of accounts.
B)Controlling account.
C)Schedule of accounts receivable.
D)Subsidiary ledger.
E)Special journal.

Question 54

After posting is completed,there may be an error if:

A)The sum of the supplier account balances does not equal the total in the purchases journal.
B)The sum of the accounts receivable ledger does not equal the balance in the Sales account.
C)The sum of the supplier account balances does not equal the general ledger Accounts Payable controlling account balance.
D)The balance in the sales journal does not equal the Accounts Receivable account balance.
E)The sum of the accounts receivable ledger does not equal the balance in the sales journal.

Question 55

The Accounts Payable account in the general ledger is:

A)A controlling account for the subsidiary accounts payable ledger.
B)The account that controls the purchases journal.
C)The subsidiary account to the purchases journal.
D)Part of a special journal.
E)Part of a subsidiary ledger.

Question 56

Which of the following journals would a company use to record cash collections from customers,net of discounts taken?

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

Question 57

All of the following statements regarding source documents are true except:

A)Source documents provide the basic information processed by an accounting system.
B)Source documents include invoices,cash register files,and employee earnings records.
C)Source documents should not be sent directly from a company's system to its customers or suppliers.
D)Source documents can be paper or electronic files.
E)Source documents can include Web communications.

Question 58

The accounting principle that prescribes an accounting information system conform with a company's activities,personnel,and structure is the:

A)Control principle.
B)Compatibility principle.
C)Relevance principle.
D)Flexibility principle.
E)Cost-Benefit principle.

Question 59

The main difference in the sales journal under the perpetual and periodic inventory system is:

A)The perpetual system has a column to record cost of goods sold but not the periodic system does not.
B)The sales tax receivable column that is used under the perpetual system but not the periodic.
C)The sales tax payable column that is used under the perpetual system but not the periodic.
D)The accounts receivable column that is used under the perpetual system but not the periodic.
E)The column for recording cash that is used under the perpetual system but not the periodic.

Question 60

A company makes a cash sale of $24,000.The cost of the merchandise is $13,000.Identify the journal the transaction would be recorded in.

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

Question 61

If a company issues a check for $2,750 in payment of the salaries expense for the last half of the month,the transaction will be recorded in which journal?

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

Question 62

A company uses a sales journal,purchases journal,cash receipts journal,cash disbursements journal,and general journal.A perpetual inventory system is used.The following transactions were completed by the company during the current month of February: Record these transactions in the appropriate journals that follow.

Question 63

Maxie's Game World sold games to a customer on credit for $2,600,terms 1/10,n/30 and the cost of the games was $1,700.When recording the collection from the customer made within the discount period,in its cash receipts journal,Maxie's would enter:

A)$2,600 in the Cash Dr.column and $2,600 in the Accounts Receivable Cr.column.
B)$2,574 in the Cash Dr.column and $2,574 in the Accounts Receivable Cr.column.
C)$2,574 in the Cash Dr.column,$26 in the Sales Discount Dr.column and $2,600 in the Accounts Receivable Cr.column.
D)$2,600 in the Accounts Receivable Dr./Sales Cr.column and $2,600 in the Cash Cr.column.
E)$2,600 in the Cash Dr.column.$2,600 in the Sales Cr.column,and $1,700 in the Cost of Goods Sold Dr./Inventory Cr.column.

Question 64

A company that reports segment information had average total assets of $1,522,450 and total net income of $590,700.Segment A had average total assets of $927,800 and segment operating income of $298,300.Segment B had average assets of $594,650 and segment operating income of $292,400.The segment return on assets for Segment A is:

A)60.9%.
B)32.2%.
C)50.5%.
D)38.8%.
E)49.2%.

Question 65

Identify the accounting information system principle indicated in letters a-e that applies to each of the situations below by entering the appropriate letter next to the statement.

Question 66

Enter the letter of the following terms on the line next to the appropriate definition of each.

Question 67

Farthington Soccer Supplies purchases merchandise from a supplier on credit,terms 2/10,n/30 for $15,300.When recording the payment transaction made within the discount period in its cash disbursement journal,Farthington would enter:

A)$15,300 in the Cash Cr.column and $15,300 in the Inventory Dr.column.
B)$15,300 in the Cash Cr.column and $15,300 in the Accounts Payable Dr.column.
C)$15,300 in the Inventory Cr.column;$14,994 in the Accounts Payable Dr.column;and $306 in the Inventory Cr.column.
D)$14,994 in the Accounts Payable Dr.column and $14,994 in the Cash Cr.column.
E)$15,300 in the Accounts Payable Dr.column;$14,994 in the Cash Cr.column;and $306 in the Inventory Cr.column.

Question 68

Maxie's Game World sold games to a customer on credit for $2,600,terms 1/10,n/30 and the cost of the games was $1,700.When recording the sales transaction in its sales journal,Maxie's would enter:

A)$1,700 in the Accounts Receivable Dr./Sales Cr.column and $2,600 in the Cost of Goods Sold Dr./Inventory Cr.column.
B)$2,600 in the Accounts Receivable Dr./Sales Cr.column and $1,700 in the Accounts Payable Dr./Purchases Cr.column.
C)$2,600 in the Accounts Receivable Dr./Sales Cr.column and $2,600 in the Cash Cr.column.
D)$2,600 in the Accounts Receivable Dr./Sales Cr.column and $1,700 in the Cost of Goods Sold Dr./Inventory Cr.column.
E)$1,700 in the Accounts Receivable Dr./Sales Cr.column and $2,600 in the Other Accounts column Dr.column.

Question 69

Salem Co.uses special journals to record its transactions.They use the perpetual inventory system.Shown below are the purchasing and cash disbursement transactions for current month of July: Record these transactions in the following journals.

Question 70

Wildlife Wholesale Supply sold birdseed to a retailer for $860,receiving cash at the time of sale.The cost of the birdseed was $370.When recording the collection from the customer,in its cash receipts journal,Wildlife would enter:

A)$860 in the Cash Dr.column and $860 in the Accounts Receivable Cr.column.
B)$370 in the Cash Dr.column and $370 in the Accounts Receivable Cr.column.
C)$860 in the Cash Dr.column;$860 in the Sales Cr.column;and $370 in the Other Accounts Cr.column.
D)$860 in the Accounts Receivable Dr.column,$860 in the Cash Cr.column;and $370 in the Cost of Goods Sold Dr./Inventory Cr.column.
E)$860 in the Cash Dr.column;$860 in the Sales Cr.column;and $370 in the Cost of Goods Sold Dr./Inventory Cr.column.

Question 71

This is a cash receipts journal (perpetual system).
2.Journal entries explanation:

Question 72

Farthington Soccer Supplies purchases merchandise from a supplier on credit,terms 2/10,n/30 for $15,300.When recording the purchase transaction in its purchases journal,Farthington would enter:

A)$15,300 in the Accounts Payable Cr.column and $15,300 in the Inventory Dr.column.
B)$15,300 in the Accounts Payable Cr.column and $15,300 in the Supplies Dr.column.
C)$15,300 in the Inventory Dr.column,$14,994 in the Accounts Payable Cr.column,and $306 in the Purchase Discount Cr.column.
D)$14,994 in the Inventory Dr.column and $14,994 in the Accounts Payable Cr.column.
E)$15,300 in the Other Accounts Dr.column and $15,000 in the Inventory Cr.column.

Question 73

If a company issues a check for $2,900 in payment of merchandise,identify the journal the transaction would be recorded in.

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

Question 74

Wexim Toys purchased merchandise from a supplier on credit,terms 2/10,n/30 for $9,300.Three days later the company returned $1,100 of the merchandise.When recording the return transaction,the company would record:

A)$1,100 in the Accounts Payable Cr.column and $1,100 in the Inventory Dr.column of the purchases journal.
B)Debit Accounts Payable $1,100 and credit Inventory $1,100 in the general journal.
C)$1,100 in the Cash Cr.column and $1,100 in the Inventory Cr.column in the cash disbursements journal.
D)Debit Cash $1,100 and credit Inventory $1,100 in the general journal.
E)$1,100 in the Accounts Payable Dr.column and $1,100 in the Cash Cr.column of the cash disbursements journal.

Question 75

The Saginaw Company uses special journals for sales,purchases,cash receipts,cash disbursements,and uses a general journal.They operate with a perpetual inventory system.Record the following transactions related to sales and cash receipts that occurred during the month of August: Record the above transactions into the appropriate journals that follow.

Question 76

Barrier Scuba Equipment purchased supplies costing $3,000 on credit.Identify the journal the transaction would be recorded in.

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

Question 77

A company that reports segment information had average total assets of $1,522,450 and total net income of $590,700.Segment A had average total assets of $927,800 and segment operating income of $298,300.Segment B had average assets of $594,650 and segment operating income of $292,400.The segment return on assets for Segment B is:

A)60.9%.
B)32.2%.
C)50.5%.
D)38.8%.
E)49.2%.

Question 78

The Tigre Company uses special journals for sales,purchases,cash receipts,cash disbursements,and uses a general journal.They operate with a perpetual inventory system.Record the following transactions related to purchases and cash payments that occurred during the current month of June: Record the above transactions into the appropriate journals shown below.

Question 79

The Stapleton Company uses special journals for sales,purchases,cash receipts,cash disbursements,and uses a general journal.They operate with a perpetual inventory system.The following transactions occurred during the current month of September: Record the above transactions into the appropriate journals that follow.

Question 80

The following special journal is taken from a merchandising company that uses the perpetual inventory system: