At the end of 2014, CNC Corporation's accounting information system produced the following trial balance: CNC completed the following transactions in January 2015: a.Purchased inventory on account, $300.
B.Collected cash from customers for prior year sales, $500.
C.Paid current month's wages, $900.
D.Had land appraised.Cost of doing the appraisal (paid in cash), $700.Appraised value of land, $3,000.
E.Sold inventory with a cost basis of $200 on account, $800.
F.Declared dividends, $50.
G.Hired additional sales staff.Expected monthly salaries, $80.
H.Purchased supplies for cash, $150.
i.Paid creditors for previous purchases, $150.
j.Signed a contract for annual employee retreat, $450.CNC's operations are currently confined to a single state, but management is considering expanding to additional states.Which of the following statements is most true?
A)After the expansion, sequential numbering of source documents will no longer be an effective internal control.
B)After the expansion, the chart of accounts may need to use hierarchical coding.
C)After the expansion, CNC will add at least two steps to the accounting cycle.
D)After the expansion, CNC must employ more information technology in its accounting information system.

Question

At the end of 2014, CNC Corporation's accounting information system produced the following trial balance:  CNC completed the following transactions in January 2015: a.Purchased inventory on account, $300.
B.Collected cash from customers for prior year sales, $500.
C.Paid current month's wages, $900.
D.Had land appraised.Cost of doing the appraisal (paid in cash), $700.Appraised value of land, $3,000.
E.Sold inventory with a cost basis of $200 on account, $800.
F.Declared dividends, $50.
G.Hired additional sales staff.Expected monthly salaries, $80.
H.Purchased supplies for cash, $150.
i.Paid creditors for previous purchases, $150.
j.Signed a contract for annual employee retreat, $450.CNC's operations are currently confined to a single state, but management is considering expanding to additional states.Which of the following statements is most true?
A)After the expansion, sequential numbering of source documents will no longer be an effective internal control. 
B)After the expansion, the chart of accounts may need to use hierarchical coding. 
C)After the expansion, CNC will add at least two steps to the accounting cycle. 
D)After the expansion, CNC must employ more information technology in its accounting information system.

Quizplus · Accepted Answer

If CNC Corporation expands to additional states, it may need to use hierarchical coding in the chart of accounts to accommodate the increased complexity of its operations. Sequential numbering of source documents and the number of steps in the accounting cycle may not be affected by the expansion, and the need for more information technology in the accounting system will depend on the specific circumstances of the expansion.

At the End of 2014, CNC Corporation's Accounting Information System