Deck 7: Accounting Information Systems

Question 1

Due to electronic files and Web communications, source documents are no longer required.

Answer 1

False

Question 2

Input devices are the means to make accounting information available to users.

Answer 2

False

Question 3

Output devices include journal entries, keyboards and scanners.

Answer 3

False

Question 4

The compatibility principle requires that an accounting system report useful, understandable, timely, and pertinent information for effective decision making.

Question 5

Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decision makers.

Question 6

Internal controls include policies to protect company assets and achieve compliance with laws and regulations.

Question 7

The flexibility principle prescribes that an accounting information system be able to adapt to changes in the company, business environment, and needs of decision makers.

Question 8

When auditors audit financial statements and a company's controls they rely on accounting system databases.

Question 9

The general journal is used for transactions not covered by special journals and for adjusting, closing, and correcting entries.

Question 10

Decision makers in practice do not need a basic knowledge of how accounting information systems work because they can be relied upon to be accurate.

Question 11

The purchases journal is used to record purchases of merchandise on credit.

Question 12

A sales journal is used to record cash sales.

Question 13

The five basic components of accounting systems are source documents, input devices, information processors, information storage, and output devices.

Question 14

Accounting information processes are structured to eliminate the need for professional judgment.

Question 15

Control, competency, compatibility, flexibility and cost-benefit are the five basic principles of accounting information systems.

Question 16

A special journal is used to record and post transactions of a similar type.

Question 17

With advanced technology there is no need to trace information that has been entered into an accounting information system to its source.

Question 18

Input devices involve converting data on source documents from written or electronic form to a form usable for the system.

Question 19

Information processors capture information and enable its transfer to the system's information processing component.

Question 20

The cost-benefit principle prescribes that the benefits from an activity in an accounting information system should outweigh the costs of that activity.

Question 21

Computer networks are links among computers giving different users and different computers access to common databases, programs, and hardware.

Question 22

Off-the-shelf accounting software is not adequate to meet the needs of small businesses.

Question 23

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 24

Segment return on assets is calculated by dividing segment average assets by segment operating income.

Question 25

Subsidiary ledgers are not needed in perpetual inventory systems because the accounting system captures sufficient details to support analyses that decision makers need.

Question 26

Most transactions for merchandising businesses fall into four groups: sales, purchases, cash receipts, and cash disbursements.

Question 27

Most companies use online processing instead of batch processing because online processing immediately updates databases.

Question 28

Equipment, inventory, and investments are other accounts that can include detailed information in a subsidiary ledger.

Question 29

External users of financial statements are generally interested in segment information to understand a company's business activities.

Question 30

An advantage of online processing is that databases are updated in batches.

Question 31

Enterprise resource planning software packages include the programs that manage a company's vital operations such as accounting, order taking, and manufacturing.

Question 32

Enterprise resource planning software is primarily used for recording journal entries.

Question 33

A subsidiary ledger is a listing of individual accounts that contains detailed information on specific accounts in the general ledger.

Question 34

When posting from special journals, each individual debit and credit entry of similar transactions is entered in the general ledger.

Question 35

A business segment is a part of a company that is separately identified by its products or services, or by the geographic market it serves.

Question 36

The controlling account, Accounts Payable in the general ledger has a separate subsidiary account for each creditor in the accounts payable ledger.

Question 37

Because special journals are designed to suit businesses, good systems design for a business could include collapsing the sales and cash disbursements journal into one journal.

Question 38

The SAP enterprise-resource planning software is being used to help direct the operations of many of the world's largest companies.

Question 39

The accounts receivable ledger is used for storing transactions data regarding individual customers.

Question 40

Special journals allow an efficient division of labor, which is also an effective control procedure.

Question 41

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.

Question 42

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.

Question 43

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

Question 44

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.

Question 45

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

Question 46

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.

Question 47

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.

Question 48

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

Question 49

A columnar journal is any journal with only one column.

Question 50

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.

Question 51

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.

Question 52

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.

Question 53

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

Question 54

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.

Question 55

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.

Question 56

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.

Question 57

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

Question 58

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.

Question 59

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

Question 60

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

Question 61

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)Capture information from source documents.
D)Eliminate the need for professional judgment due to their accuracy.
E)Are the means to make information available to users.

Question 62

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

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

Question 63

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

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

Question 64

Source documents:

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

Question 65

Input devices include:

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

Question 66

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

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

Question 67

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

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

Question 68

Information storage databases:

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

Question 69

A subsidiary ledger:

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

Question 70

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

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

Question 71

The sales journal is used for recording:

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

Question 72

Which of the following is not an output device?

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

Question 73

Which of the following is not a special journal:

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

Question 74

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

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

Question 75

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

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

Question 76

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

Question 77

The purchases journal is used for recording:

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

Question 78

An accounts receivable ledger is a:

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

Question 79

An accounts payable ledger:

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

Question 80

The Accounts Payable controlling account:

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