Deck 6: Accounting Information Systems

Question 1

Most small businesses commence their operations using manual accounting systems.

Answer 1

True

Question 2

A cash payments journal is an example of a general journal.

Answer 2

False

Question 3

The starting point in the development of an accounting system is the implementation stage where systems are installed and made operational.

Answer 3

False

Question 4

After an accounting information system has been implemented the effectiveness of the system can be checked by monitoring it for weaknesses.

Question 5

During the analysis stage of development of an accounting information system, the information needs of internal and external users are determined.

Question 6

An effective way to process a large number of transactions is to use control accounts and subsidiary ledgers.

Question 7

The accounts receivable subsidiary ledger is also called the creditors ledger.

Question 8

Detailed data from a control account are summarised in a subsidiary ledger account.

Question 9

A subsidiary ledger is a group of accounts with a common characteristic such as accounts payable.

Question 10

A subsidiary ledger is not part of the general ledger and is not used in preparing a trial balance.

Question 11

A schedule of accounts receivable is a list of all accounts and their balances in a debtors' subsidiary ledger.

Question 12

If a transaction cannot be recorded in a special journal, it is not necessary to record it at all.

Question 13

A special journal is used to record similar types of transactions such as all cash receipts.

Question 14

Each entry in a credit sales journal results in one entry at selling price and another entry at cost.

Question 15

The sum of the subsidiary ledger balances must equal the balance in the control account in the general ledger.

Question 16

The recording of small payments in the form of currency is known as 'petty cash'.

Question 17

Entries in a special purchases journal are made from suppliers' invoices.

Question 18

The symbol 'CP1' used as a posting reference indicates that the transaction has been posted from page 1 of the general journal.

Question 19

Special journals for sales, purchases and cash can substantially increase the number of entries that are made in the general journal.

Question 20

In a manual accounting system each of the steps in the process is performed by hand.

Question 21

When posting special journal entries there must be a dual posting, once to the control account and once to the subsidiary account.

Question 22

In a computerised accounting system, there are programs for performing journalising and posting of transactions.

Question 23

In a fully integrated accounting system, data are entered into one module must be manually updated in all other integrated modules.

Question 24

Integrated accounting systems are made up of subsystems for functions such as inventory, non-current assets and accounts receivable and payable.

Question 25

Electronic spreadsheets are commonly used to develop budgets and calculate depreciation on non-current assets.

Question 26

In a computerised accounting system, transaction posting to ledgers is performed manually.

Question 27

A major advantage of a computerised accounting system is the ability to process numerous transactions quickly.

Question 28

Computerised accounting systems are much more susceptible to human error than are manual accounting systems.

Question 29

Computerised accounting systems can be programmed to automatically produce accounting documents including invoices and financial statements.

Question 30

The high cost of computerised accounting systems may make them less accessible to small business.

Question 31

If the accounting system is cost-effective, provides useful output and has the flexibility to meet future needs, it can contribute to both individual and organisational goals.

Question 32

A major disadvantage of using a computerised accounting system is the need to have people with the skills to operate the system.

Question 33

A subsidiary ledger replaces the need for a general ledger.

Question 34

If the balances in the subsidiary ledger are correct then the corresponding balances in the general ledger must also be correct.

Question 35

The cash receipts journal is only used to record collections of accounts receivable.

Question 36

The sales journal is only used to record sales of inventory on account.

Question 37

Which of the following statements is false?

A) The same basic principles of accounting apply whether the accounting information system is manual or computerised.
B) Generally small entities require much more sophisticated accounting systems than large entities.
C) Cost-effectiveness is a basic principle underpinning efficient and effective accounting information systems.
D) Cost-effectiveness means that the costs of providing information are less than the benefits from use of that information.

Question 38

Which of the following statements is true?

A) The starting point in the development of an accounting system is the implementation stage where systems are installed and made operational.
B) During the analysis stage of development of an accounting information system, the information needs of internal and external users are determined.
C) After an accounting information system has been implemented the effectiveness of the system is assured.
D) None, all the statements are false.

Question 39

The principles of effective accounting systems include:

A) conservatism.
B) flexibility.
C) accrual accounting.
D) solvency.

Question 40

Implementation of an accounting information system requires that:

A) the system is monitored for weaknesses.
B) the information needs of internal users be identified.
C) documents, procedures and processing equipment be installed and made operational.
D) the job descriptions are prepared and the reports are formatted.

Question 41

Each of the following is a feature of internal control except:

A) limited access to assets.
B) adequate design of documents.
C) authorisation of transactions.
D) independent internal verifications.

Question 42

Internal controls are concerned with:

A) safeguarding assets.
B) the extent of government regulations.
C) only manual systems of accounting.
D) preparing income tax returns.

Question 43

Related selling activities do not include:

A) shipping the goods.
B) making a sale.
C) ordering the merchandise.
D) billing the customer.

Question 44

A business handles a large volume of similar transaction data by using:

A) one general ledger.
B) control accounts and subsidiary ledgers.
C) worksheets.
D) financial statements.

Question 45

The design of an accounting information system requires that:

A) the information needs of external users are identified.
B) the forms and documents are designed and the methods and procedures are selected.
C) the personnel are closely supervised during training.
D) the sources of the data collection are identified.

Question 46

Which of the following is not a common example of a subsidiary ledger?

A) Accounts receivable
B) Accounts payable
C) Sales journal
D) Debtors' ledger

Question 47

The general ledger account that summarises subsidiary ledger data is called a:

A) general account.
B) control account.
C) summary account.
D) temporary account.

Question 48

A subsidiary ledger is a group of:

A) financial statements with a common reporting date.
B) worksheets with a common reporting date.
C) ledgers with a common characteristic.
D) accounts with a common characteristic.

Question 49

The accounts receivable account control account in the general ledger can also be called the:

A) purchases control account.
B) debtors' control account.
C) creditors' subsidiary ledger.
D) sales control account.

Question 50

If Supreme Ltd has the following opening account balances for its debtors of: $6,000, $7,000, $4,000; and cash received from debtors during the period amounted to $5,000 and if no additional sales on account were made to the debtors during the period, then the closing balance of the control account for accounts receivable is:

A) $17,000.
B) $12,000.
C) $22,000.
D) $4,000.

Question 51

A list of all accounts and their balance in the accounts payable subsidiary ledger is also known as a:

A) trial balance.
B) schedule of creditors.
C) control account.
D) statement of financial position.

Question 52

When control and subsidiary accounts are included in an accounting information system there must be a dual posting, once to the:

A) control account and once to the general journal.
B) control account and once to the subsidiary account.
C) special journal and once to the cash account.
D) general ledger and once to the trial balance.

Question 53

The sum of the account balances in a subsidiary ledger must equal the balance in the:

A) general journal.
B) trial balance.
C) special journal.
D) related control account

Question 54

A two-column journal that is used to record a variety of different transactions is also known as a:

A) general journal.
B) special journal.
C) final journal.
D) worksheet.

Question 55

A sales journal is used for the recording of all:

A) cash received including cash from debtors.
B) cash paid including cash to creditors.
C) purchases of inventory whether for cash or on account.
D) sales of inventory on account.

Question 56

Which of the following is not an example of a special purpose journal?

A) Sales journal.
B) Cash receipts journal.
C) Cash payments journal.
D) General journal.

Question 57

A cash payments journal is used to record:

A) sales of inventory on account.
B) purchases of inventory on credit.
C) correcting and adjusting entries.
D) all cash paid out including for cash purchases of inventory.

Question 58

Cash sales of inventory are entered in the:

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

Question 59

Credit sales of assets other than inventory are recorded in the:

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

Question 60

Using a perpetual inventory system, inventory that is sold on account for $9,000 and which had a cost of $6,500 would be recorded using the following entry?

A)
B)
C)
D)

Question 61

The total of the sales on account column recorded in the sales journal is posted using the following entry:

A)
B)
C)
D)

Question 62

The total of the cost of sales on account column recorded in the sales journal, is posted using the following entry:

A)
B)
C)
D)

Question 63

A cash receipts journal will always include the following column:

A) cash.
B) accrued expenses.
C) unpaid liabilities.
D) depreciation.

Question 64

All receipts of cash are recorded in:

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

Question 65

In a cash receipts journal, the amount deducted by a customer for paying within the credit terms is entered in the:

A) cash column.
B) total sales column.
C) bank column.
D) discount allowed column.

Question 66

All purchases of inventory are recorded:

A) only in a cash payments journal.
B) in the purchases journal.
C) only in the general journal.
D) directly in the ledger accounts.

Question 67

Entries in the purchases journal for inventory are made from the following source documents:

A) debtors invoices.
B) cash register receipts.
C) creditors invoices.
D) ledger accounts.

Question 68

Credit purchases of equipment or supplies are recorded in the:

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

Question 69

In a cash receipts journal the total of the accounts receivable column is posted as a credit to:

A) the cost of sales.
B) the individual customer's accounts.
C) the accounts receivable control account in the general ledger.
D) discount allowed.

Question 70

Which of the following symbols is an appropriate reference to indicate that the postings found in ledger accounts are from page 1 of the purchases journal?

A) CR1
B) CP1
C) GJ1
D) P1

Question 71

Transactions that cannot be entered in a special journal are:

A) not recorded.
B) recorded in a general journal.
C) deferred until the next reporting period.
D) entered directly into the ledger accounts instead.

Question 72

Special journals for sales, purchases and cash:

A) significantly increase the number of entries in a general journal.
B) totally eliminate the need for a general journal.
C) substantially reduce the number of entries in the general journal.
D) are only able to be used in a manual accounting information system.

Question 73

In a multicolumn journal, the amounts for debit and credit:

A) must be equal.
B) need not be equal.
C) will always be different.
D) will not be the same.

Question 74

The total amount of a column labelled as 'other' in a cash receipts journal is:

A) posted as a debit.
B) posted as a credit.
C) posted once to the cash account and once to accounts receivable.
D) never posted.

Question 75

The amounts recorded in the accounts payable column in a cash payments journal are posted:

A) individually on a daily basis to the subsidiary ledger.
B) individually on a daily basis to the purchases journal.
C) only in total at the end of the reporting period to the income statement.
D) only in total at the end of the reporting period to the statement of financial position.

Question 76

Where credit purchases of items other than inventory are numerous which of the following journals is expanded into a multicolumn journal to record the purchases?

A) General journal.
B) Cash payments journal.
C) Purchases journal.
D) Sales journal.

Question 77

In a computerised accounting information system the steps of journalising, posting and preparing a trial balance are performed:

A) by employees who enter transactions by hand.
B) at low speed by employees.
C) automatically by the computer.
D) manually.

Question 78

In a fully integrated accounting information system, data entered into one module:

A) are not automatically updated into other modules within the system.
B) are automatically updated in all other relevant modules.
C) are recorded only as a single entry, either debit or credit.
D) also need to be entered into all other subsystems.

Question 79

Which of the following would not be regarded as an advantage in an integrated computerised accounting information system?

A) Fast processing time
B) Quick report production
C) Error reduction
D) Slow processing time

Question 80

Which of the following would be regarded as a disadvantage of an integrated computerised accounting information system?

A) Reduction in processing time
B) Not making full use of the system's capabilities
C) Flexible report production
D) Virtually error-free posting