Question 1

A trial balance is completed after posting but before proving the subsidiary ledger by preparing a schedule of the controlling account.

Accepted Answer

The answer of A trial balance is completed after posting...

Question 2

A schedule of accounts receivable is a listing of all customer accounts and account balances.

Accepted Answer

A schedule of accounts receivable is a listing of all customer accounts and account balances, therefore it is true.

Question 3

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

Accepted Answer

The control principle for accounting information systems refers to the ability of the system to provide methods and procedures that allow managers to control and monitor business activities. This ensures that the system is able to identify any errors, fraud, or inefficiencies in the business process and take corrective actions. While the other choices are important considerations for designing an effective accounting information system, they do not specifically relate to the control principle.

Question 4

Which of the following statements regarding accounting information systems is not true?
A) Accounting information systems communicate information to business decision makers.
B) Accounting information systems are useful to effective decision making.
C) Accounting information systems organize data in useful forms.
D) Accounting information systems are not subject to internal control policies.
E) Accounting information systems collect and process data from transactions and events.

Accepted Answer

Accounting information systems are subject to internal control policies and procedures to ensure the accuracy, completeness, and reliability of the information. Internal controls are put in place to safeguard the information, prevent fraud and errors, and ensure compliance with laws and regulations.

Question 5

Segment information is not helpful to investors for evaluating a company's profitability, risk, or growth.

Accepted Answer

Segment information provides investors with insights into a company's profitability, risk, and growth potential by breaking down financial data into specific business segments. This allows investors to identify areas of strength and weakness within a company, make informed investment decisions, and assess the overall performance of a business.

Question 6

Which of the following statements is not true regarding internal control procedures?
A) Internal control procedures include methods to achieve compliance with laws and regulations.
B) Internal control procedures direct operations toward common goals.
C) Internal control procedures are designed to safeguard company assets.
D) Internal control procedures are not affected by the cost-benefit principle.
E) Internal control procedures are designed to ensure reliable financial reports.

Accepted Answer

The statement "Internal control procedures are not affected by the cost-benefit principle" is not true. Internal control procedures are always evaluated with respect to the cost-benefit principle, which means that the cost of implementing internal controls should not outweigh the benefits of having those controls in place. Companies need to balance the costs and benefits of implementing internal control procedures.

Question 7

If the total balance of the accounts payable ledger equals the total of the controlling Accounts Payable account, then the accounts are presumed to be correct.

Accepted Answer

If the total balance of the accounts payable ledger equals the total of the controlling Accounts Payable account, it indicates that all the entries have been recorded correctly and the balance is accurate. This reconciliation process helps to ensure that there are no errors or discrepancies in the accounts payable records. Therefore, when the balances match, the accounts are considered to be correct.

Question 8

Individual transactions in the purchases journal are regularly posted to creditor accounts in the accounts payable ledger.

Accepted Answer

This statement is true. Transactions in the purchases journal relate to purchases made on credit from creditors, and therefore need to be recorded in the accounts payable ledger for accurate accounting and tracking of amounts owed to creditors.

Question 9

The purchases journal is typically used to record only purchases of inventory.

Accepted Answer

The purchases journal is used to record all types of purchases, not just purchases of inventory. It may also include purchases of supplies, equipment, and other assets.

Question 10

Account balances in the general ledger and the subsidiary ledgers should be proved for accuracy after posting is complete.

Accepted Answer

It is important to ensure that the account balances in the general ledger and subsidiary ledgers are accurate after posting is complete to ensure the accuracy of the financial statements. This is typically done through a process of reconciliation and review.

Question 11

Each transaction recorded in the sales journal yields a debit to Accounts Receivable and a credit to Sales.

Accepted Answer

The sales journal records sales transactions and the debits are made to Accounts Receivable while the credits are made to Sales.

Question 12

Which of the following accounting principles prescribes that an accounting information system report useful, understandable, timely, and pertinent information for effective decision-making?
A) Flexibility principle.
B) Relevance principle.
C) Compatibility principle.
D) Cost-Benefit principle.
E) Control principle.

Accepted Answer

The principle that prescribes that information provided by an accounting information system be relevant to its users for decision-making purposes is the relevance principle. This principle ensures that the information provided by an accounting information system is useful, understandable, timely, and pertinent to enable effective decision-making.

Question 13

Three transactions that would be recorded in the sales journal are: (1) recording sales taxes (2) recording sales returns and allowances and (3) recording purchases discounts.

Accepted Answer

The sales journal is used to record credit sales of merchandise, not sales taxes, sales returns and allowances, or purchases discounts.

Question 14

A procedure called direct posting of sales invoices involves posting sales directly to the customer accounts in the accounts receivable ledger, making a period end journal entry, and avoiding the use of the sales journal.

Accepted Answer

The statement is true as it describes the direct posting method of recording sales transactions.

Question 15

A columnar journal is any journal with only one column.

Accepted Answer

A columnar journal typically has multiple columns to organize different types of information, such as date, account titles, and amounts.

Question 16

A company using the perpetual inventory system records the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.

Accepted Answer

In a perpetual inventory system, the cost of goods sold and inventory are updated continuously as sales occur. The sales journal is used to record sales transactions, and it includes columns for recording the cost of goods sold and the decrease in inventory.

Question 17

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

Accepted Answer

The flexibility principle of accounting information systems prescribes that the system be able to adapt to changes in the company, business environment, and needs of decision makers. This allows the system to remain relevant and useful over time as the organization and its needs evolve. The other options may also be important principles, but they are not specifically related to flexibility.

Question 18

The five fundamental principles of accounting information systems are:
A) Historical cost, relevance, compatibility, flexibility, and cost-benefit.
B) Control, relevance, compatibility, flexibility, and safety.
C) Historical cost, relevance, compatibility, timeliness, and cost-benefit.
D) Control, accountability, relevance, compatibility, and flexibility.
E) Control, relevance, compatibility, flexibility, and cost-benefit.

Accepted Answer

The five fundamental principles of accounting information systems are control, relevance, compatibility, flexibility, and cost-benefit. These principles ensure that the system is effective, efficient, and aligned with organizational goals.

Question 19

Posting debits from the Sales journal to Accounts Receivable twice-once to the general ledger account Accounts Receivable and once to the customer's subsidiary account-violates the accounting equation of debits equal credits.

Accepted Answer

Posting debits from the Sales journal to Accounts Receivable twice, violates the accounting equation of debits equal credits. Debits should only be posted once, either to the general ledger account Accounts Receivable or to the customer's subsidiary account, to ensure accuracy in the accounting records.

Question 20

The sales journals of companies using the perpetual and periodic inventory systems differ in that under the perpetual system a column is used to record cost of goods sold and inventory amounts for each sale but not the periodic system.

Accepted Answer

Under the perpetual system, cost of goods sold and inventory amounts are updated with each sale, whereas under the periodic system, these amounts are calculated at the end of the period and not recorded with each sale. Therefore, the sales journals for these two systems differ in this respect.

Quiz 7: Accounting Information Systems