Question 1

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

Accepted Answer

The statement is true. Under the perpetual system, the cost of goods sold and inventory amounts are updated with each sale in separate columns, whereas the periodic system only updates these amounts at the end of the accounting period.

Question 2

A company using the perpetual inventory system records the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.

Accepted Answer

The answer of A company using the perpetual inventory system...

Question 3

Individual transactions in the purchases journal are regularly posted to creditor accounts in the accounts payable ledger.

Accepted Answer

The purchases journal is used to record credit purchases or purchases made on account, and the individual transactions recorded in this journal are posted to creditor accounts in the accounts payable ledger.

Question 4

A procedure called direct posting of sales invoices involves posting sales directly to the customer accounts in the accounts receivable ledger, making a period end journal entry, and avoiding the use of the sales journal.

Accepted Answer

The statement accurately describes direct posting of sales invoices.

Question 5

The purchases journal is typically used to record only purchases of inventory.

Accepted Answer

The purchases journal is used to record all purchases, not just inventory purchases. It includes items such as office supplies, raw materials, and equipment.

Question 6

Which of the following accounting principles prescribes that an accounting information system report useful, understandable, timely, and pertinent information for effective decision-making?
A)Flexibility principle.
B)Relevance principle.
C)Compatibility principle.
D)Cost-Benefit principle.
E)Control principle.

Accepted Answer

The principle that prescribes that an accounting information system report useful, understandable, timely, and pertinent information for effective decision-making is the relevance principle. This principle ensures that the information presented is relevant and applicable to the decision-making needs of the users.

Question 7

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.

Accepted Answer

Posting debits from the Sales journal to Accounts Receivable twice, violates the accounting equation of debits equal credits. Debits should only be posted once, either to the general ledger account Accounts Receivable or to the customer's subsidiary account, to ensure accuracy in the accounting records.

Question 8

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

Accepted Answer

It is crucial to verify the accuracy of account balances in the general ledger and subsidiary ledgers after posting to ensure the integrity of financial information. This is done through a procedure called a trial balance.

Question 9

A columnar journal is any journal with only one column.

Accepted Answer

The answer of A columnar journal is any journal with...

Question 10

The five fundamental principles of accounting information systems are:
A)Historical cost, relevance, compatibility, flexibility, and cost-benefit.
B)Control, relevance, compatibility, flexibility, and safety.
C)Historical cost, relevance, compatibility, timeliness, and cost-benefit.
D)Control, accountability, relevance, compatibility, and flexibility.
E)Control, relevance, compatibility, flexibility, and cost-benefit.

Accepted Answer

The answer of The five fundamental principles of accounting information...

Question 11

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.

Accepted Answer

The answer of Three transactions that would be recorded in...

Question 12

The flexibility principle of accounting information systems prescribes that the:
A)System conforms to a company's activities, personnel, and structure.
B)System aid managers in controlling and monitoring business activities.
C)System report useful, understandable, timely, and pertinent information for effective decision making.
D)Benefits from an activity in the system outweigh the costs of the activity.
E)System be able to adapt to changes in the company, business environment, and needs of decision makers.

Accepted Answer

The flexibility principle of accounting information systems indicates that the system should be able to adapt to changes in the company, business environment, and the needs of decision-makers. This is to ensure that the system remains relevant and useful in providing accurate and timely information for effective decision-making. Therefore, option E is the correct choice.

Question 13

Segment information is not helpful to investors for evaluating a company's profitability, risk, or growth.

Accepted Answer

Segment information provides valuable information to investors for evaluating a company's profitability, risk, and growth. It allows investors to see which segments/ markets of the company are performing well and which ones need improvement. This helps investors make more informed decisions and understand the potential opportunities and risks associated with the company's business activities.

Question 14

Which of the following statements regarding accounting information systems is not true?
A)Accounting information systems communicate information to business decision makers.
B)Accounting information systems are useful to effective decision making.
C)Accounting information systems organize data in useful forms.
D)Accounting information systems are not subject to internal control policies.
E)Accounting information systems collect and process data from transactions and events.

Accepted Answer

Accounting information systems are subject to internal control policies, which are put in place to ensure the accuracy, completeness, and reliability of the information produced by the system. These controls include measures such as separation of duties, access controls, and physical controls to prevent unauthorized access or alteration of information.

Question 15

Which of the following statements is not true regarding internal control procedures?
A)Internal control procedures include methods to achieve compliance with laws and regulations.
B)Internal control procedures direct operations toward common goals.
C)Internal control procedures are designed to safeguard company assets.
D)Internal control procedures are not affected by the cost-benefit principle.
E)Internal control procedures are designed to ensure reliable financial reports.

Accepted Answer

Internal control procedures are affected by the cost-benefit principle. The costs of implementing internal control procedures should not outweigh the benefits derived from them. Companies must strive to balance the costs and benefits of internal control procedures to implement the most efficient and effective procedures that achieve their objectives.

Question 16

The control principle for accounting information systems requires that the:
A)System report useful, understandable, timely, and pertinent information for effective decision making.
B)System be able to adjust to changes in the company, business environment, and needs of decision makers.
C)System conforms to a company's activities, personnel, and structure.
D)Benefits from an activity outweigh the costs of the activity.
E)System must have methods and procedures allowing managers to control and monitor business activities.

Accepted Answer

The control principle for accounting information systems requires that the system must have methods and procedures allowing managers to control and monitor business activities. The other options are important principles, but they do not specifically relate to the control principle.

Question 17

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

Accepted Answer

This is because Accounts Receivable represents the amount owed to a company by its customers for goods or services sold on credit, and Sales represents the revenue generated by the company from those sales. Therefore, a sale would result in an increase in Accounts Receivable (a debit) and an increase in Sales (a credit).

Question 18

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

Accepted Answer

When the total balance of the accounts payable ledger matches the total of the controlling Accounts Payable account, it indicates that all the transactions have been recorded correctly, and the accounts are in balance. Therefore, the accounts are presumed to be correct.

Question 19

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

Accepted Answer

A schedule of accounts receivable is used to track all outstanding balances owed to a company by its customers. It typically includes the customer's name, outstanding balance, and payment due date.

Question 20

A trial balance is completed after posting but before proving the subsidiary ledger by preparing a schedule of the controlling account.

Accepted Answer

The answer of A trial balance is completed after posting...

Quiz 7: Accounting Information Systems