Deck 7: Accounting for Systems

Question 1

How many of the following are important considerations when developing a new accounting system or expanding an existing system?
$\bullet$ Flexibility/adaptability with a growing business
$\bullet$ Only fully understandable by senior managers
$\bullet$ Compatibility with the business operations
$\bullet$ Adequacy of built-in controls for business protection

A) 1
B) 2
C) 3
D) 4

Answer 1

3

Question 2

Which of these does not normally provide an input into an accounting system?

A) Bank deposit slip
B) Managerial report
C) Cheque butt
D) Supplier invoice

Answer 2

B

Question 3

Which of the following are advantages of using a subsidiary ledger and control account system?
I) Removes a mass of detail from the general ledger
II) Allows division of responsibility
III) Provides effective internal control

A) I and II only.
B) II and III only.
C) I and III only.
D) I, II and III.

Answer 3

D

Question 4

The limitations of internal control systems include:

A) absolute assurance for safeguarding against customer theft.
B) employee indifference to correct procedures.
C) cost of implementation.
D) all of these options.

Question 5

The accounts receivable subsidiary ledger shows the following balances on 31 January 2019. The balance in the accounts receivable control account at this date is:
(Assume recording and balancing of accounts payable records are up to date.)
$\bullet$ Barry Ltd $2 875
$\bullet$ Roberts Ltd $8 113
$\bullet$ Symes Ltd $3 499

A) $0
B) $14 487 Dr
C) $14 487 Cr
D) Cannot be calculated from the information given

Question 6

Which of the following statements is correct?

A) A subsidiary ledger requires double entry accounting.
B) A business with three debit customers would need to set up an accounts payable subsidiary ledger.
C) A manual accounting system that has both a control account and a subsidiary ledger for creditors requires transactions for creditors to be recorded twice.
D) Every business must have special journals to record transactions for returns of goods.

Question 7

Which of the following would not normally use a subsidiary ledger and control account system?

A) Plant and equipment
B) Trade creditors
C) Mortgage
D) Accounts receivable

Question 8

The assignment of tasks so that the work of one employee acts as a check on the work of another employee is known as:

A) custodianship of assets.
B) process control.
C) division of responsibility.
D) collusion.

Question 9

Which of the following statements relating to an accounting system is incorrect?

A) Only large businesses require an electronic accounting system.
B) An accounting system transforms economic transactions into information that is useful for decision making.
C) An accounting system is used for the efficient and reliable processing of an entity's financial data.
D) An accounting system makes the processing of repetitive transactions more efficient.

Question 10

The main reason for using control accounts and subsidiary ledgers is:

A) to separate the accounting tasks between employees.
B) to enable more timely and efficient processing.
C) to allow the manual system to be more easily computerised.
D) to reduce the number of mistakes in the recording process.

Question 11

The three phases in the development of an accounting system are:
I) Systems analysis
II) Systems plan
III) Systems design
IV) Systems implementation and review

A) I, II, and III
B) I, III and IV
C) I, II, and IV
D) II, III and IV

Question 12

Details of amounts owed by individual debtors are found in the:

A) accounts payable subsidiary ledger.
B) accounts payable control account.
C) accounts receivable subsidiary ledger.
D) general ledger.

Question 13

In the development of an accounting system which stage gathers facts that provide a thorough understanding of a business's information requirements and the sources of information?

A) Systems analysis
B) Systems design
C) Systems implementation
D) Systems review

Question 14

A system of internal control is described as:

A) including aspects of administrative controls and accounting controls.
B) all procedures adopted by an entity to control its activities and protect its assets.
C) all measures used by a business to promote the reliability of accounting data.
D) all of these options.

Question 15

Which of the following statements about control accounts is incorrect?

A) they provide summarised data.
B) they are included in the subsidiary ledger.
C) they apply the normal rules of debit and credit.
D) they are included in the trial balance.

Question 16

Internal controls established to provide general operational efficiency and adherence to prescribed policies are:

A) Administrative controls
B) Procedural controls
C) Accounting controls
D) Programming controls

Question 17

Data that have been processed in some prescribed manner to be more useful for decision making is called:

A) output.
B) details.
C) information.
D) input.

Question 18

Which of the following is not an important consideration in the development of an accounting system?

A) Comparability with other systems used within the industry.
B) Compatibility with the organisation's other systems
C) Adaptability
D) Cost versus benefits

Question 19

Which of the following is not a physical means of internal control?

A) Employment of security staff
B) Employee identification cards
C) Manager Authorisation
D) Password protected access to buildings

Question 20

Hodges Ltd uses a subsidiary ledger and control account system for its accounts receivable. At the end of the accounting period a list of customers' accounts and balances owing is prepared from the subsidiary ledger. The purpose of this customer list is to:

A) determine the amount that should be posted to the accounts receivable control account.
B) establish whether the total debits and total credits in the subsidiary ledger are equal.
C) provide information necessary for the completion of the trial balance.
D) prove that the subsidiary ledger agrees with the control account.

Question 21

What is the general ledger posting from the credit sales journal?

A) DR Sales, CR Accounts receivable
B) DR Sales, CR GST payable, CR Cash
C) DR Accounts receivable, CR Sales, CR GST payable
D) DR Cash, DR GST payable, CR Accounts receivable

Question 22

A Discount received column could be found in which special journal?

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

Question 23

A general ledger account that summarises the detail maintained in a subsidiary ledger is called a:

A) key account.
B) summary account.
C) control account.
D) master account.

Question 24

Subsidiary ledgers in a manual accounting system have three main advantages. Which of the following is not one of those advantages?

A) They dramatically reduce the occurrence of bad debts.
B) They remove a mass of detail from the general ledger.
C) They allow a division of labour in maintaining the general and subsidiary ledgers.
D) They improve internal control through the reconciliation of the control account with the subsidiary ledger.

Question 25

Columns for GST receivable could be found in which two special journals?

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

Question 26

The posting reference column in the general ledger is used to show the source journal for the transaction. Which of the following symbols is commonly used as a posting reference to refer to page 5 of the cash receipts journal?

A) CRJ5
B) 5CR
C) R5
D) C5R

Question 27

Which of the following is the main advantage of setting up special journals?

A) They can be used with a cash accounting system.
B) They remove the need for double entry recording.
C) They make the preparation of a trial balance easier.
D) They reduce the time required to journalise each entry and post to the general ledger.

Question 28

Which of the following is an advantage of using a sales journal compared with recording all sales transactions in a general journal?

A) Narrations are required for each entry
B) Each sales transaction is recorded on multiple lines to provide full details
C) Only the totals of each column are posted to the general ledger
D) The date of each transaction is not required to be recorded

Question 29

All the details of transactions between the entity and individual customers are found in the:

A) accounts receivable subsidiary ledger.
B) accounts payable control account.
C) accounts payable subsidiary ledger.
D) sales ledger.

Question 30

Which of these is not an advantage of using special journals compared to recording all transactions in a general journal?

A) Preparation of a trial balance is easier.
B) Time required to journalise transactions is reduced.
C) Posting to the ledger is more efficient.
D) Similar transactions are grouped.

Question 31

Which of the following statements is correct? In a manual accounting system:

A) cash purchases are recorded in the cash receipts journal.
B) cash purchases are recorded in the purchases journal.
C) cash purchases are recorded in the general journal.
D) cash purchases are recorded in the cash payments journal.

Question 32

Which of the following transactions could not result in a credit balance in a debtor's account?

A) Receive a deposit from a debtor for goods ordered.
B) Customer returns a faulty product after they have paid the account in full.
C) Customer pays their account after the debt had been written off as a bad debt.
D) Goods are sold on credit with payment due in the next accounting period.

Question 33

A column for discount allowed could be found in which special journal?

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

Question 34

Which of the following transactions would be recorded in the cash payments journal?

A) Payment of telephone account
B) Purchase of goods on credit
C) Rent accrued at the end of the accounting period
D) Personal expenses paid from owner's private cheque book

Question 35

Which of the following transactions would not be recorded in the cash receipts journal?

A) Cash refund to a customer for goods returned by them.
B) Goods sold for cash.
C) Second hand furniture sold for cash.
D) Borrowings received from the bank.

Question 36

Which of the following is not a column heading in a purchases journal?

A) Purchase date
B) Supplier's name
C) GST receivable
D) Cash/Bank

Question 37

Individual stock records for a retail company are maintained in a:

A) control account.
B) subsidiary ledger.
C) special journal for inventory.
D) manual accounting system.

Question 38

A credit of $550 000, including 10% GST, was posted to the accounts payable control account on the last day of the month. This posting would most likely have come from which special journal?

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

Question 39

For a GST-registered business, columns for GST Payable will be found in which two special journals?

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

Question 40

Source documents used for the preparation of the cash payments journal include:

A) Receipts to customers
B) Credit notes issued by suppliers
C) Signed contracts
D) Cheque butts

Question 41

Which of the following is an automated function provided by accounting software programs?

A) Bank feeds.
B) Online invoicing.
C) Payroll.
D) All of these are automated functions.

Question 42

Reduction in processing costs is an advantage/disadvantage of:

A) advantage of computerised accounting systems.
B) disadvantage of computerised accounting systems.
C) advantage of manual accounting systems.
D) disadvantage of manual accounting systems.

Question 43

Which of the following are considered disadvantages of a computerised accounting system?
I) Inexperienced staff.
II) Slower processing.
III) Undetected viruses.
IV) Increase in processing errors.
V) Programs that are not suited to the business's needs.

A) I, II, III and IV.
B) II, III, IV, and V.
C) I, III, and V.
D) III, IV, and V.

Question 44

Accounting software systems based on Cloud technology:

A) can be accessed by anyone from any mobile device.
B) can be accessed anytime by authorised staff from the one desktop device only.
C) cannot be accessed anywhere, anytime through a mobile device.
D) can be accessed anywhere, anytime by authorised staff through various mobile technologies.

Question 45

Which module is central to all computerised accounting systems?

A) Sales modules.
B) Purchases module.
C) Payroll module.
D) General ledger module.

Question 46

What advantage does the automatic production of documents and reports provide a business?

A) Processing of thousands of transactions at high speed.
B) Production of relevant reports in a timely manner.
C) Fast response time for customer queries.
D) Automatic posting of transactions to the general ledger.

Question 47

Data input for each computerised accounting module is obtained from:

A) tax documents.
B) reporting documents.
C) source documents.
D) handwritten documents only.

Question 48

Which of the following is not an example of a module that can be found in most accounting software packages?

A) Reports.
B) Sales.
C) Payroll.
D) All of these options are examples of modules within an accounting software package.

Question 49

Which automatic procedure is an advantage of computerised accounting systems?

A) Posting to general ledger.
B) Production of sales invoices.
C) Preparation of financial statements.
D) All of these options.

Question 50

Which of the following statements relating to electronic spreadsheets is incorrect?

A) They can be used to analyse business data.
B) They can be used to develop business budgets.
C) They assist is determining 'what if' scenarios.
D) They are not used by accountants.

Question 51

Which of the following is not a problem of computerised accounting systems?

A) Computer viruses
B) Computer fraud
C) Power failures
D) Inability to network the systems

Question 52

Which of the following is not a general ledger software package?

A) Excel
B) Reckon
C) Xero
D) MYOB

Question 53

The main reason a business may not fully realise the advantages of a computerised accounting system is due to:

A) lack of back-ups in instances of power failures.
B) undetected viruses from low security.
C) unauthorised access by hackers.
D) failed systems due to problems with the hardware, software or personnel.

Question 54

Barry is both a debtor and a creditor of Allen Ltd. At the end of the period Barry owes Allen Ltd $1400 while Allen Ltd owes him $800. Allen Ltd should record which journal entry to offset the amounts against each other?

A) DR Accounts receivable $700; CR Accounts payable $700
B) DR Accounts receivable $2200; CR Accounts payable $2200
C) DR Accounts payable $800; CR Accounts receivable $800
D) DR Accounts payable $2200; CR Accounts receivable $2200

Question 55

Computerised accounting systems are collectively referred to as:

A) ledger systems.
B) accounting information systems.
C) software packages.
D) cloud systems.

Question 56

procedures must exist to ensure the accuracy of data input into a computerised accounting system.

A) Automatic
B) Administrative
C) Control
D) Physical

Question 57

Cathy is both a debtor and a creditor of Palm Ltd. At the end of the period Cathy owes Palm Ltd $500 while Palm Ltd owes Cathy $2000. After offsetting the amounts, Palm Ltd's books show a balance of how much as still owing to or from Cathy?

A) Cathy (creditor) is owed $1500
B) Cathy (debtor) owes $1500
C) Cathy (creditor) is owed $2500
D) Cathy (debtor) owes $2500

Question 58

Which of the following is not an advantage of a computerised accounting system compared to a manual system?

A) Reduced processing costs
B) More timely reports
C) Greater possibility of a catastrophic systems failure
D) Faster response time to wide range of queries

Question 59

Unauthorised access to a business's computer files and/or confidential information would be performed by people known as:

A) hackers.
B) employees.
C) viruses.
D) fraudsters.

Question 60

Kingston Supplies bought $20 000 worth of goods from Princetown Pty Ltd on credit. Before payment was made Princetown, in turn, purchased $8000 worth of supplies on credit from Kingston Supplies. The general journal entry to be recorded in the books of Kingston Supplies to offset the amount owing to it against the amount it owes is:

A) Accounts receivable, Princetown Pty Ltd $8 000 Accounts payable, Princetown Pty Ltd $8 000
B) Accounts receivable, Princetown Pty Ltd 12 000 Accounts payable, Princetown Pty Ltd 12 000
C) Accounts payable, Princetown Pty Ltd 12 000 Accounts receivable, Princetown Pty Ltd 12 000
D) Accounts payable, Princetown Pty Ltd 8 000 Accounts receivable, Princetown Pty Ltd 8 000

Question 61

In comparing computerised and manual accounting systems, which of the following statements is correct?

A) A computerised system does not require any reversing entries.
B) Errors are easier to find in a computerised accounting system.
C) In computerised systems, the use of journals is less important than in a manual system.
D) A worksheet for adjustments is still often prepared when a computerised system is used.

Question 62

Which step is not performed automatically in a computerised accounting system?

A) The initial recording of transactions
B) Posting to the general ledger
C) Preparing a trial balance
D) Journalising reversing entries