Deck 7: Accounting Information Systems

Question 1

Hide and Seek has retail outlets at both large malls and small shopping centres. Its accounting information system is able to track total revenues by store, by type of mall, by size of store, by state and by region. This is an example of which feature of a good information accounting system?

A)compatibility
B)flexibility
C)favourable cost- benefit relationship
D)control

Answer 1

A

Question 2

Special journals are a means of classifying transactions according to type to attain greater efficiency in processing.

Answer 2

True

Question 3

Design of an accounting information system begins with a trial balance.

Answer 3

False

Question 4

The combination of personnel, records and procedures that a business uses to meet its need for financial data is referred to as the:

A)collecting and reporting system.
B)input system.
C)management system.
D)accounting information system.

Question 5

The main computer in a network, where the program and data are stored is called the:

A)server.
B)hardware.
C)software.
D)database.

Question 6

The system of electronic linkages that allows different computers to share the same information is known as the:

A)server.
B)menu.
C)software.
D)network.

Question 7

Keeping accurate records of accounts receivable is an example of which feature of a good accounting information system?

A)favourable cost- benefit relationship
B)control
C)flexibility
D)compatibility

Question 8

A business's computer data processing system consists of:

A)personnel, records, procedures.
B)software, hardware, personnel.
C)general journal, special journal, general ledger.
D)none of the above

Question 9

The Curtis Antique Shop is designing an accounting information system. Which of the following should Curtis consider when designing the system?

A)It should be compatible with the business's structure and personnel.
B)It should be designed to meet all the requirements of management, regardless of the costs involved.
C)It should allow employees flexibility in setting the working hours.
D)Curtis should consider all of the above.

Question 10

The three stages of data processing are:

A)inputs, processing and outputs.
B)processing, reports and decision making.
C)source documents, processing and decision making.
D)inputs, decision making and outputs.

Question 11

Horn Music has recently decided to add harpsichords to its musical instrument product line. The accounting information system feature which would allow this change to be handled efficiently is:

A)flexibility.
B)favourable cost- benefit relationship.
C)control.
D)compatibility.

Question 12

Hardware is the electronic equipment that includes:

A)computers, monitors, printers and networks.
B)computers, monitors and software.
C)monitors, printers, software and databases.
D)monitors, printers, software and networks.

Question 13

A chart of accounts uses number ranges for accounts.

Question 14

Which of the following is a feature of an effective accounting information system?

A)flexibility
B)compatibility
C)control
D)all of the above

Question 15

Inputs into accounting systems are the reports used for decision making, including the financial statements.

Question 16

The set of programs that cause the computer to perform the work desired is called the:

A)network.
B)hardware.
C)server.
D)software.

Question 17

The chart of accounts lists all the accounts and their account numbers.

Question 18

A well designed accounting system must be able to accommodate change.

Question 19

A favourable cost- benefit relationship:

A)exists in computerised accounting systems only.
B)is impossible to achieve.
C)offers maximum benefits at a minimum cost.
D)Both A and C are correct.

Question 20

Inputs to an accounting system would include:

A)invoices.
B)bank deposit slips.
C)both of the above
D)none of the above

Question 21

Outputs from an accounting system would include:

A)a statement of changes in equity.
B)a balance sheet.
C)an income statement.
D)all of the above

Question 22

Spreadsheets are ideally suited to preparing budgets.

Question 23

Computerised accounting packages are organised by modules. Changes to one module will automatically update information in other modules.

Question 24

The sum of the account balances in the accounts receivable subsidiary ledger should equal the balance in the accounts receivable account in the general ledger.

Question 25

The final stage of data processing for an accounting system is the:

A)preparation of the special journals.
B)generation of the accounting reports.
C)posting of transactions to the ledger accounts.
D)preparation of the trial balance.

Question 26

Spreadsheets are organised:

A)by debits and credits.
B)by departments.
C)as a rectangular grid.
D)alphabetically.

Question 27

Every entry in the cash receipts journal includes a debit to the Cash account.

Question 28

Computer programs that link data by means of formulas and functions are referred to as:

A)subsidiary ledgers.
B)networks.
C)inputs.
D)spreadsheets.

Question 29

Small businesses can streamline their accounting by using business documents as special journals.

Question 30

When special journals are used, all transactions must be posted individually to the general ledger.

Question 31

ERP systems are used by some large organisations. ERP stands for:

A)Enterprise Record Package.
B)Early Reporting Process.
C)Expense and Revenue Program.
D)Enterprise Resource Planning.

Question 32

Transactions in the sales journal are posted to both the general ledger and the accounts receivable subsidiary ledger.

Question 33

Which of the following is not a feature of an ERP system?

A)It requires little staff training.
B)The impact of changes in one part of the organisation are automatically reflected elsewhere.
C)Separate systems for payroll and sales may be unnecessary.
D)It feeds data into software for all firm activities.

Question 34

Design of an accounting system begins with the:

A)chart of accounts.
B)opening trial balance.
C)previous year's financial statements.
D)general ledger.

Question 35

Debit postings to the accounts receivable general ledger account come from the cash receipts journal and the general journal.

Question 36

In a computerised accounting system, processing which allows accountants time to check the entries for accuracy before they are posted is called:

A)online processing.
B)delayed processing.
C)automatic processing.
D)batch processing.

Question 37

All of the following are common examples of special journals except:

A)accounts payable journal.
B)purchases journal.
C)sales journal.
D)cash receipts journal.

Question 38

In a computerised accounting system processing performed continuously as the transactions occur is referred to as:

A)batch processing.
B)quick processing.
C)module processing.
D)online processing.

Question 39

Both credit sales and cash sales are recorded in the sales journal.

Question 40

Each cell in a spreadsheet is defined by:

A)a row number and a column letter.
B)formulas and labels.
C)a row number and a label.
D)a formula and a column number.

Question 41

On 10 April, Pro Supplies received a cheque from Carter Services for payment of an invoice dated 24 March for $4 400, including GST. Credit terms are 3/30. How would this transaction be recorded in Pro's cash receipts journal?

A)debit Cash $4 268, debit GST clearing account $12, debit sales discount $120, credit accounts receivable- Carter Services $4 400
B)debit Cash $4 400, credit Accounts receivable- Carter Services $4 400
C)debit Cash $4 400, credit GST clearing account $12, credit sales discount $120, credit accounts receivable- Carter Services $4 268
D)none of the above

Question 42

Accounts that provide supporting details for a control account in the general ledger are known as a:

A)special journal.
B)control account.
C)subsidiary ledger.
D)spreadsheet.

Question 43

Posting the entries in the sales journal to the accounts receivable subsidiary ledger should be done:

A)only at the end of the accounting period.
B)at the end of each month.
C)on a weekly basis.
D)on a daily basis.

Question 44

The account that is credited for every transaction entered in the sales journal is:

A)accounts receivable.
B)accounts payable.
C)sales.
D)cash.

Question 45

Fantasia Enterprises received a tax refund cheque in the mail and immediately deposited it in the bank. Assuming the use of special journals, this entry would be recorded in the:

A)cash receipts journal.
B)cash payments journal.
C)general journal.
D)none of the above

Question 46

Sales discount is recorded in the general journal.

Question 47

Rockhill Industries received payment after the expiration of the discount period from a customer who had purchased goods on credit. The sales invoice was for $3 000, and credit terms were 3/15 n/30. Ignore GST. In the cash receipts journal:

A)$3 000 will appear in the accounts receivable debit column.
B)$3 000 will appear in the sales revenue credit column.
C)$3 000 will appear in the accounts receivable credit column.
D)none of the above

Question 48

Litten Enterprises received payment in full from a customer who had purchased goods on credit. Assuming the use of special journals, this entry would be recorded in the:

A)cash receipts journal.
B)general journal.
C)sales journal.
D)purchases journal.

Question 49

The general ledger accounts used when posting the sales journal are:

A)sales returns and allowances, sales revenue, accounts receivable, and cost of sales.
B)purchases, sales returns and allowances, sales revenue, accounts receivable and GST clearing account.
C)cash, sales revenue, accounts payable and inventory.
D)sales revenue, cost of sales, inventory, accounts receivable and GST clearing account.

Question 50

A cash receipts journal could contain all of the following columns except:

A)accounts receivable.
B)cash.
C)sales revenue.
D)purchases.

Question 51

On 1 April, Pro Supplies received a cheque from Carter Services for payment of an invoice dated 24 March for $1 800 with credit terms of 2/10 n/30. Assuming the payment includes 10% GST, how would this transaction be recorded in Pro's cash receipts journal?

A)debit Cash $1 764, debit Sales discount $36, credit Accounts receivable- Carter Services $1 800
B)debit Cash $1 800, credit Accounts receivable- Carter Services $1 800
C)debit Cash $1 800, credit Sales discount $33, credit GST clearing account $3, credit Accounts receivable- Carter Services $1 764
D)debit Cash $1 764, debit Sales discount $33, debit GST clearing account $3, credit Accounts receivable- Carter Services $1 800

Question 52

A column for Cost of sales appears in which of the following journals?

A)cash receipts and sales
B)sales and purchases
C)cash payments and cash receipts
D)cash payments and purchases

Question 53

On 1 April, Pro Supplies received a cheque from Carter Services for payment of an invoice dated 24 March for $1 800 with credit terms of 2/10 n/30. Ignoring GST, how would this transaction be recorded in Pro's cash receipts journal?

A)debit Cash $1 764, debit Sales discount $36, credit Accounts receivable- Carter Services $1 800
B)debit Cash $1 800, credit Accounts receivable- Carter Services $1 764, credit discount received $36
C)debit Cash $1 800, credit Accounts receivable- Carter Services $1 800
D)debit Accounts receivable- Carter Services $1 800, credit Cash $1 800

Question 54

The total of all balances in the accounts receivable subsidiary ledger should equal the balance of the:

A)accounts receivable account in the general ledger.
B)accounts payable account in the general ledger.
C)sales revenue account in the general ledger.
D)cash account in the general ledger.

Question 55

Posting the entries in the sales journal to the general ledger:

A)should be done at the end of each month.
B)should be done on a daily basis.
C)should be done on a weekly basis.
D)should be done only at the end of the accounting period.

Question 56

The sales journal is used to record the sale of:

A)assets other than inventory on credit.
B)inventory for cash.
C)inventory on credit.
D)assets other than inventory for cash.

Question 57

Assuming the use of special journals, borrowing $10 000 from the bank would be recorded in the:

A)sales journal.
B)cash payments journal.
C)general journal.
D)cash receipts journal.

Question 58

Downing Distributors returned defective supplies and received a cash refund. Assuming the use of special journals, this entry would be recorded in the:

A)sales journal.
B)cash payments journal.
C)general journal.
D)cash receipts journal.

Question 59

The accounts receivable credit column of the cash receipts journal is:

A)posted in summary only at the end of the month.
B)posted in summary at the end of the month and by individual amounts on a daily basis.
C)posted by individual amounts at the end of the month.
D)posted by individual amounts at the end of the accounting period.

Question 60

Lee Enterprises received payment within the discount period from a customer who had purchased goods on credit. The sales invoice was for $2 000 and credit terms were 3/15 n/30. Ignore GST. In the cash receipts journal, $1 940 will appear in the:

A)cash debit column.
B)sales revenue credit column.
C)accounts receivable debit column.
D)cash credit column.

Question 61

The accounts payable subsidiary ledger controls the accounts payable account in the general ledger.

Question 62

Assuming the use of special journals, the purchase of inventory from Jerri Blackwell on credit would be recorded in the:

A)sales journal.
B)cash payments journal.
C)purchases journal.
D)general journal.

Question 63

The purchase of equipment for cash would be recorded in the:

A)purchases journal.
B)cash payments journal.
C)general journal.
D)sales journal.

Question 64

Describe in detail the process of posting data from the sales journal of a firm using a perpetual inventory system. Where does it go, when is it posted, and what steps are followed?

Question 65

The end- of- month balance in Dryer Industries cash receipts journal "Other Accounts, Amount" column is $22 630. How will this column be posted?

A)The total will be posted to the cash account as a debit.
B)The individual items will be posted to their respective accounts.
C)The total will not be posted.
D)B and C are both correct.

Question 66

The individual amounts in the 'Accounts receivable' column of the sales journal are posted:

A)individually to the accounts receivable subsidiary ledger.
B)individually to the sales account in the general ledger.
C)individually to the accounts receivable account in the general ledger.
D)in total to the accounts receivable subsidiary ledger.

Question 67

Assume a perpetual inventory system. A purchase on credit for $1 650 including 10% GST would be recorded in the purchases journal as:

A)debit to inventory $1 500, debit to GST clearing account $150, credit to accounts payable $1 650.
B)debit to inventory $1 500, credit to accounts payable $1 500.
C)debit to inventory $1 650, credit to GST clearing account $150, credit to accounts payable $1 500.
D)none of the above

Question 68

Amounts are posted individually from the purchases journal to the:

A)accounts payable subsidiary ledger.
B)cash account in the general ledger.
C)inventory account in the general ledger.
D)accounts payable account in the general ledger.

Question 69

The accounts receivable subsidiary ledger has postings from which set of journals?

A)Sales, cash payments and general
B)Sales, cash receipts and general
C)Purchases, general and cash receipts
D)Purchases, cash receipts and sales

Question 70

The purchase of office equipment on credit would be recorded in:

A)the cash receipts journal.
B)either the cash payments journal or the purchases journal.
C)the purchases journal.
D)the cash payments journal.

Question 71

Which journals would have a column for GST?

A)Cash receipts and sales
B)Purchases and sales
C)All the special journals
D)Cash receipts and cash payments

Question 72

Which column in the cash payments journal involves a posting to both the general ledger and the subsidiary ledger?

A)Accounts payable debit column
B)Cash credit column
C)Inventory debit column
D)Other accounts debit column

Question 73

Big Industries purchased products from Small Suppliers, paying $5 000 in cash and promising to pay the remaining $5 000 in 30 days. Assuming the use of special journals, this entry would be recorded by Big Industries in the:

A)cash payments journal.
B)general journal.
C)purchases journal.
D)Both A and C.

Question 74

Assuming the use of special journals, the purchase of inventory from Landin Browning for cash would be recorded in the:

A)cash receipts journal.
B)purchases journal.
C)cash payments journal.
D)general journal.

Question 75

Which special journal could contain a column for wages paid?

A)Purchases journal
B)Cash receipts journal
C)Sales journal
D)Cash payments journal

Question 76

Which special journal could contain a column for sales discount?

A)sales journal
B)purchases journal
C)cash payments journal
D)cash receipts journal

Question 77

Which statement concerning the accounts payable subsidiary ledger is incorrect?

A)The postings from the purchases journal are to the credit of the individual subsidiary ledger accounts.
B)The debit entries equal the credit entries.
C)It keeps track of amounts owing to individual creditors.
D)None of the above are incorrect, i.e. all are correct statements.

Question 78

If special journals are used, the purchase of inventory for cash would be recorded in the cash payments journal.

Question 79

If creditors are paid within the discount period, the current treatment required by the accounting standards for the discount received is to:

A)credit the Discount allowed account.
B)credit the Inventory account with the net settlement discount.
C)debit the Discount received account.
D)No entry is required.

Question 80

Entries in the purchases journal are posted to the:

A)accounts payable subsidiary ledger only.
B)general ledger only.
C)general ledger and the accounts payable subsidiary ledger.
D)accounts payable subsidiary ledger and the purchases ledger.