Deck 7: Accounting Information Systems

Question 1

The flexibility principle prescribes that an accounting information system conform with a company's activities,personnel,and structure and adapt to a company's unique characteristics.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

A sales journal is used to record cash sales.

Question 6

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

Question 7

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

Question 8

Accounting information systems are so accurate that decision makers in practice do not need a basic knowledge of how the systems work.

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

Internal controls include policies to direct operations toward common goals,procedures to ensure reliable financial reports,safeguards to protect company assets and methods to achieve compliance with laws and regulations.

Question 14

Accurate source documents are crucial to accounting systems to limit the possibility of entering faulty data into the system.

Question 15

Input devices include journal entries,keyboards,scanners,and modems.

Question 16

With on-line systems,all information storage should be off-line to protect the data.

Question 17

Accounting information systems are designed to capture information about a company's transactions and events and to provide output including financial,managerial,and tax reports.

Question 18

The purchases journal is used to record cash purchases of merchandise.

Question 19

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

Question 20

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

Question 21

An advantage of online processing is up-to-date databases.

Question 22

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

Question 23

A subsidiary ledger is a listing of individual accounts with a common characteristic.

Question 24

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

Question 25

Segment return on assets is segment operating income divided by segment average assets.

Question 26

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 27

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

Question 28

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 29

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

Question 30

Special journals are designed in a manner that is best suited for each business,so good systems design for a business could include collapsing the sales and cash receipts journal into one journal.

Question 31

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

Question 32

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

Question 33

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

Question 34

When posting from special journals each debit and credit entry is entered as a separate amount in the general ledger.

Question 35

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

Question 36

Segment information is often useful to investors for evaluating a company's profitability,risk,and growth.

Question 37

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

Question 38

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

Question 39

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

Question 40

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

Question 41

A procedure called direct posting of sales invoices can substitute for the sales journal.

Question 42

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 43

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

Question 44

All of the following statements regarding accounting information systems are true except:

A)Accounting information systems consist of people, records, methods, and equipment.
B)Accounting information systems have the same goals and share basic components.
C)Accounting information systems are less important than ever to decision makers.
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 45

To check for accuracy after posting:
first a trial balance is completed,then,the subsidiary ledgers are tested by preparing a schedule of the controlling account.

Question 46

A company using the periodic inventory system does not record the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.

Question 47

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)Control, relevance, compatibility, timeliness, and cost-benefit.
E)Control, relevance, compatibility, flexibility, and cost-benefit.

Question 48

All of the following statements regarding internal control procedures are true except:

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 49

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

Question 50

Individual transactions in the sales journal are regularly posted to customer accounts in the accounts payable ledger.

Question 51

A columnar journal is any journal with only one column.

Question 52

The flexibility principle of accounting information systems prescribes 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 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 53

All of the following statements regarding accounting information systems are true except:

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 do not establish internal control procedures.
D)Accounting information systems are crucial to effective decision making.
E)Accounting information systems communicate information to business decision makers.

Question 54

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

Question 55

The purchases journal is identical under both the periodic and the perpetual inventory systems.

Question 56

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

Question 57

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 internal controls.
D)System adapts to changes in the company, business environment, and needs of decision makers.
E)System conforms to a company's activities, personnel, and structure.

Question 58

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

Question 59

The accounting principle that prescribes an accounting information system to report useful,understandable,timely,and pertinent information for effective decision-making is the:

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

Question 60

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 61

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

A)Recording adjusting transactions.
B)Posting transactions to special journals.
C)Accumulating debits and credits.
D)Collecting detailed listings of amounts.
E)Recording cash receipts.

Question 62

A log that is used to record and post transactions of a similar type is a:

A)Schedule.
B)Columnar ledger.
C)Special journal.
D)General journal.
E)Subsidiary ledger.

Question 63

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 64

Information storage:

A)Eliminates the need for professional judgment.
B)Keeps data in a form accessible to information processors.
C)Provides the basic information processed by an accounting system.
D)Captures information from source documents.
E)Cannot be online.

Question 65

The purchases journal is used for recording:

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

Question 66

The use of an Accounts Payable controlling account:

A)Reduces the number of accounts in the subsidiary ledger.
B)Reduces the total number of accounts maintained.
C)Reduces the number of entries in the general journals.
D)Reduces the number of accounts in the general ledger.
E)Increases the number of columns in the journals.

Question 67

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

A)Sales journal.
B)General journal.
C)Cash receipts journal.
D)Accounts receivable ledger.
E)Cash disbursements journal.

Question 68

Output devices include all of the following except:

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

Question 69

The sales journal is used for recording:

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

Question 70

An accounts receivable ledger is:

A)A subsidiary ledger that contains an account for each credit customer.
B)A list of the balances of selected accounts in the accounts receivable ledger that is added to show the total amount of the significant accounts receivable outstanding.
C)A book of original entry that is designed and used for recording only a specified type of transaction.
D)The ledger that contains the financial statement accounts of a business.
E)A subsidiary ledger that contains a separate account for each creditor (supplier) to the company.

Question 71

A record that contains all accounts (with amounts)of a company is the:

A)General ledger.
B)General journal.
C)Special ledger.
D)Special journal.
E)Column balance ledger.

Question 72

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 73

Source documents:

A)Are input devices.
B)Provide the basic information processed by an accounting system.
C)Cannot be electronic files.
D)Store processed information for future use.
E)Cannot be paper documents.

Question 74

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)Input devices.

Question 75

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 76

An accounts payable ledger is:

A)A subsidiary ledger that contains an account for each supplier (creditor).
B)A list of the balances of all the accounts in the accounts receivable ledger that is added to show the total amount of accounts receivable outstanding.
C)A book of original entry that is designed and used for recording only a specific type of transaction.
D)The ledger that contains the financial statement accounts of a business.
E)A 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 77

Input devices include:

A)Bar-code readers.
B)Printers.
C)Software.
D)Ledgers.
E)Information processors.

Question 78

Information processors:

A)Include information storage.
B)Interpret, transform, and summarize information for use in analysis and reporting.
C)Are components of an accounting system that keep data in accessible form.
D)Are the means to take information out of an accounting system and make it available to users.
E)Include scanners.

Question 79

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 80

The accounts receivable ledger:

A)Is for storing transaction data for customers.
B)Is for storing transaction data for individual customers.
C)Is for storing transaction data for individual creditors.
D)Is for storing transaction date for creditors.
E)Is also the controlling account.