Deck 7: Accounting Information Systems

Question 1

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

Answer 1

True

Question 2

Off-the-shelf accounting software is inadequate to meet the needs of small businesses.

Answer 2

False

Question 3

Enterprise-application software is a stand-alone program not commonly used in North America.

Answer 3

False

Question 4

The General Journal is flexible and can be used for original,adjusting,closing,and correcting entries.

Question 5

The MIS is a subsystem of the accounting information system.

Question 6

Because accounting information systems are so accurate,decision makers in practice do not need to have a basic knowledge of how the systems work.

Question 7

Accounting information systems are designed to capture information about a company's transactions and to provide output including financial statements and special purpose reports.

Question 8

The General Ledger system represents the primary data base in the AIS.

Question 9

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

Question 10

Four qualitative characteristics of information produced by an AIS are that the information must be timely,accurate,relevant and cost-effective.

Question 11

Enterprise-application software packages keep the programs that manage a company's vital operations.

Question 12

The Purchases Journal is the same in both the periodic and perpetual systems.

Question 13

A special journal is any journal used for recording and posting transactions of a similar type.

Question 14

Source documents are a group of components that collect and process raw financial data into timely,accurate,relevant,and cost-effective information to meet the purposes of internal and external users.

Question 15

Enterprise-application software is used primarily for journal entries.

Question 16

Under the perpetual system,special journals are not required.

Question 17

The periodic system does not record the increase in cost of goods sold and decrease in inventory at the time of sale.

Question 18

When posting from special journals all debit and credit entries are entered as separate amounts.

Question 19

A management information system (MIS)is designed to collect and process data within an organization for the purpose of providing users with information.

Question 20

A sales journal is used for recording cash sales.

Question 21

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 22

Under the perpetual system cash sales are recorded at the point of sale.

Question 23

The general rule for posting is that the controlling account is debited periodically for an amount equal to the sum of the debits to the subsidiary ledger,and is credited periodically for an amount equal to the sum of the credits to the subsidiary ledger.

Question 24

A Sales Journal is used to record cash sales.

Question 25

Individual transactions in the Sales Journal are regularly posted to customer accounts in the Accounts Payable ledger.

Question 26

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

Question 27

The difference in the Sales Journal between the perpetual and periodic systems is the column to record cost of goods sold and inventory amounts for each sale.

Question 28

A Sales Journal is used to record sales of merchandise on credit.

Question 29

Each transaction recorded in the Sales Journal includes a debit to Accounts Receivable and a credit to Sales Revenue.

Question 30

Three issues involving the Sales Journal include: (1)recording sales taxes (2)recording sales returns and allowances and (3)recording purchase discounts.

Question 31

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

Question 32

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

Question 33

Items posted from the General Journal carry the initial P.

Question 34

Account balances in the General Ledger and the subsidiary ledgers are tested for accuracy after posting is complete.

Question 35

The Accounts Payable ledger is used for storing transaction data regarding individual customers.

Question 36

Equipment,inventory,and investments may also need subsidiary ledgers.

Question 37

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 38

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 39

In general,subsidiary ledgers are not needed in perpetual systems because the accounting system captures sufficient details to support analyses that decision makers need.

Question 40

A columnar journal is a journal with only one column.

Question 41

Most of the transactions of a merchandising company fall into four groups,including all of the following except:

A) Sales on credit.
B) Sales returns and allowances.
C) Purchases on credit.
D) Cash receipts.
E) Cash disbursements.

Question 42

Source documents:

A) Are input devices.
B) Provide basic information processed by an accounting system.
C) Can be electronic files.
D) Both provide basic information processed by an accounting system and can be electronic files.
E) All of these answers are correct.

Question 43

The Purchases Journal is used for:

A) Recording credit purchases.
B) Recording credit sales.
C) Recording cash sales.
D) Recording cash purchases.
E) Recording both credit purchases and credit sales.

Question 44

The basic components of an accounting system include:

A) Source documents.
B) Input devices.
C) Information processors.
D) Information storage.
E) All of these answers are correct.

Question 45

The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added to them to facilitate recording.In the same manner GST receivable and PST receivable columns may be added to the Purchases Journal and the Cash Disbursements Journal.

Question 46

An MIS is designed to:

A) Ensure reliable financial reports.
B) Safeguard company assets.
C) Ensure full disclosure.
D) Both ensure reliable financial reports and safeguard company assets.
E) Collect and process data.

Question 47

Special journals include:

A) Sales journal.
B) Cash receipts journal.
C) Purchases journal.
D) Cash disbursements journal.
E) All of these answers are correct.

Question 48

The General Journal is used for:

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

Question 49

The three primary components of accounting information systems are:

A) Relevance,compatibility,and flexibility.
B) Compatibility,flexibility,and cost-benefit.
C) Compatibility,flexibility,and safety.
D) Compatibility,timeliness,and cost-benefit.
E) Accounts payable,accounts receivable,and payroll.

Question 50

The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added to them to facilitate recording.

Question 51

One difference in the Sales Journal between the perpetual and periodic systems is:

A) The column to record cost of goods sold and inventory amounts sold.
B) The addition of a sales tax payable column.
C) The deletion of a sales tax payable column.
D) The column to record cost of goods sold and inventory amounts sold and the deletion of a sales tax payable column.
E) The column to record cost of goods sold and inventory amounts sold and the addition of a sales tax payable column.

Question 52

A book of original entry that is designed and used for recording only a specified type of transaction is called a:

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

Question 53

Accounting information systems:

A) Collect and process data from events and transactions.
B) Organize data in useful forms.
C) Communicate information to decision makers.
D) Both collect and process data from events and transactions and organize data in useful forms.
E) All of these answers are correct.

Question 54

Accounting information system components include:

A) People.
B) Input data.
C) Software.
D) Hardware.
E) All of these answers are correct.

Question 55

An example of a specialty component of an AIS is:

A) Subsidiary ledger.
B) Sales Journal.
C) Property,plant and equipment.
D) Cheque Register.
E) Voucher.

Question 56

The Sales Journal is used for:

A) Recording credit purchases.
B) Recording credit sales.
C) Recording cash sales.
D) Recording cash purchases.
E) Recording both credit sales and cash sales.

Question 57

The sale of inventory may:

A) decrease inventory.
B) impact the Sales Journal.
C) create accounts receivable.
D) initiate billing.
E) All of these answers are correct.

Question 58

The special journals under the perpetual inventory system:

A) Include an additional sales tax payable journal.
B) Include the sales journal,cash receipts journal,purchases journal,and cash disbursements journal.
C) Include an additional inventory journal.
D) Include an additional cost of goods sold journal.
E) Include both an additional inventory journal and an additional cost of goods sold journal.

Question 59

The ledger that contains the financial statement accounts of a business is the:

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

Question 60

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 61

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 journal.
D) Reduces the number of accounts in the general ledger.
E) Increases the number of columns in the journals.

Question 62

Explain the use of controlling accounts and subsidiary ledgers.

Question 63

When a business has more than one credit customer,a separate account receivable for each customer must be designed to show all of the following except:

A) How much each customer has paid.
B) How much each customer has purchased.
C) How much sales tax each customer has paid.
D) How much remains to be collected from each customer.
E) All of these should be included.

Question 64

The Accounts Receivable ledger is:

A) used for recording credit sales.
B) used for storing transaction data for individual customers.
C) used for storing transaction data for individual creditors.
D) used for recording cash receipts from customers.
E) also the controlling account.

Question 65

A subsidiary ledger that contains a separate account for each party that grants credit on account to the business is called a(n):

A) Controlling account.
B) Accounts Receivable Ledger.
C) Accounts Payable Ledger.
D) Merchandise Inventory Ledger.
E) Accounts Payable.

Question 66

Discuss the differences in the special journals for a perpetual versus a periodic inventory system.

Question 67

Define an accounting information system (AIS).

Question 68

A bookkeeper using a Purchases Journal recorded new store supplies purchased on account.The subledger that would be impacted as a result of this transaction is the:

A) Accounts payable subledger.
B) Accounts receivable subledger.
C) Merchandise inventory subledger.
D) Sales subledger.
E) Cash receipts journal.

Question 69

An Accounts Payable subledger is:

A) A subsidiary ledger that contains an account for each supplier that grants credit to the company.
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 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 customer that grants credit to the company.

Question 70

After posting is completed,there may be an error if:

A) The sum of the customer account balances does not equal the total in the sales journal.
B) The sum of the accounts receivable ledger does not equal the balance in the sales account.
C) The sum of the customer account balances does not equal the accounts receivable controlling account balance.
D) The balance in the sales journal does not equal the accounts receivable controlling account balance.
E) The sum of the accounts receivable ledger does not equal the balance in the sales journal.

Question 71

An Accounts Receivable ledger is:

A) A subsidiary ledger that contains an account for each credit customer.
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 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 party that grants credit on account to the entity.

Question 72

Describe the posting process for special journals.

Question 73

When a Sales Journal's sales amount column is totalled at the end of the month,the total is:

A) Debited to Sales and credited to Accounts Receivable.
B) Debited to Accounts Receivable and credited to Cash.
C) Debited to Cash and credited to Accounts Receivable.
D) Debited to Accounts Receivable and credited to Sales.
E) Debited to Cash and credited to Sales.

Question 74

The ledger that contains the financial statement accounts of a business is the:

A) Columnar journal.
B) Accounts payable ledger.
C) General journal.
D) General ledger.
E) Subsidiary ledger.

Question 75

A list of the balances of all the accounts in the Accounts Receivable Ledger that is added to show the total of accounts receivable outstanding is called a:

A) Schedule of accounts payable.
B) Controlling account.
C) Schedule of accounts receivable.
D) Subsidiary ledger.
E) Special journal.

Question 76

Explain the goals and uses of special journals.

Question 77

Explain what is meant by footing and cross footing.

Question 78

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 with a common characteristic.
D) Is a listing of all accounts with balances.
E) Is a listing of all special journals.

Question 79

The general rule for posting to a subsidiary ledger and its controlling account is:

A) The controlling account is debited periodically for an amount or amounts equal to the sum of the debits to the subsidiary ledger.
B) The controlling account is credited periodically for an amount or amounts equal to the sum of the credits to the subsidiary ledger.
C) A trial balance ledger.
D) The controlling account is both debited and credited periodically for an amount or amounts equal to the sum of the debits or credits to the subsidiary ledger.
E) All of these answers are correct.

Question 80

The Accounts Payable account in the General Ledger is:

A) The account that controls the subsidiary accounts payable ledger.
B) The account that controls the purchases journal.
C) The subsidiary account to the purchases journal.
D) Part of a special journal.
E) Part of a subsidiary ledger.