Question 1

The Accounts Payable account in the general ledger is:

Accepted Answer

The Accounts Payable account in the general ledger acts as a controlling account for the subsidiary accounts payable ledger. This means that it summarizes the balances of all individual accounts in the subsidiary ledger and is used to monitor the overall amount owed to suppliers.

Question 2

The segment return on assets:

Accepted Answer

The segment return on assets reflects the profitability of a segment by showing how efficiently a segment uses its assets to generate operating income.

Question 3

A list of all the accounts in the accounts receivable ledger with their balances and the total is a:

Accepted Answer

A schedule of accounts receivable is a list of all the accounts in the accounts receivable ledger with their balances and the total. It shows the outstanding balances owed to a company by its customers.

Question 4

The accounts receivable ledger:

Accepted Answer

The accounts receivable ledger stores transaction data for individual customers, detailing amounts owed by each customer.

Question 5

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

Accepted Answer

In order to ensure accuracy in financial record keeping, the sum of the supplier account balances should match the balance in the Accounts Payable controlling account in the general ledger. If they do not match, there may be an error in recording transactions.

Question 6

Which of the following is not true about enterprise resource planning (ERP) software:

Accepted Answer

ERP software can be used to share data with customers and suppliers through features such as vendor portals and customer relationship management modules.

Question 7

Assume that a company using a purchases journal made an error in totaling the journal's accounts payable column. The error should be discovered:

Accepted Answer

The error in totaling the accounts payable column in the purchases journal would be discovered when the total of the schedule of accounts payable is compared with the balance of the Accounts Payable account, as this comparison would reveal discrepancies.

Question 8

A business segment is part of a company that:

Accepted Answer

A business segment is a part of a company that is separately identified by its products, services, or geographic market. This means that the segment operates independently and its results can be reported separately for decision-making purposes. The other options are not applicable to every business segment.

Question 9

The accounting principle that prescribes an accounting information system conform with a company's activities, personnel, and structure is the:

Accepted Answer

The compatibility principle requires that an accounting information system be compatible with the company's activities, personnel, and structure.

Question 10

An approach that enters and processes data into the accounting system as soon as source documents are available is called:

Accepted Answer

Online processing involves entering and processing data in real-time as soon as source documents are available, making it the best choice for the given scenario. Batch processing, on the other hand, involves collecting data over a certain period of time before processing it all at once. Web communications, computer programming, and data storage may be involved in online processing, but they do not describe the approach itself.

Question 11

Chandler Company sold merchandise on credit to Jamie Morgan for $700 and the cost of the merchandise was $290. Chandler would record this sale in the:

Accepted Answer

The sale of merchandise on credit would be recorded in the Sales Journal, which is used to record all credit sales. The Accounts Receivable controlling account would also be affected, but the initial recording would be in the Sales Journal. The General Journal and General Ledger are used for adjusting entries and other types of transactions, not sales. The Cash receipts journal is used to record cash transactions, not credit sales.

Question 12

Examples of other subsidiary ledgers besides those for accounts receivable and accounts payable may include all of the following except:

Accepted Answer

Cash is typically not maintained in a subsidiary ledger as it is a part of the general ledger, whereas inventory, equipment, payroll, and investments can have detailed subsidiary ledgers.

Question 13

When posting the sales journal's activity at the end of the month, its totals are:

Accepted Answer

When posting the sales journal's activity at the end of the month, the accounts receivable balance increases as customers owe money for purchases they have made. Therefore, the sales are debited to accounts receivable and credited to sales.

Question 14

Doughton Furniture Company purchased merchandise on credit from Furniture Supply for $8,000. Two days later Doughton returned $2,000 of the merchandise due to damage. Doughton would record the return of merchandise in the:

Accepted Answer

The return of merchandise should be recorded in the general journal as it does not involve a cash transaction and affects multiple accounts. The entry would be a credit to Accounts Payable for $2,000 and a debit to Merchandise Inventory for $2,000.

Question 15

Subsidiary ledgers do all of the following except:

Accepted Answer

Subsidiary ledgers require individual postings to customer or supplier accounts, so they do not eliminate the need for such postings. They do aid in division of labor, error identification, provide up-to-date information on specific account balances, and remove excessive detail from the general ledger.

Question 16

Doughton Furniture Company purchased merchandise on credit from Furniture Supply for $8,000. Two days later Doughton returned $2,000 of the merchandise due to damage. When Doughton pays for the merchandise minus the return, it would record the payment in the:

Accepted Answer

The payment for the merchandise minus the return will be recorded in the cash disbursements journal, as it is a payment made by Doughton Furniture Company. The general journal is used for adjusting entries, errors, and unusual transactions, not regular transactions such as this. The purchases journal is used initially to record credit purchases, and the cash receipts journal is used to record cash received from customers. The accounts payable controlling account will reflect the decrease due to the return and the subsequent payment.

Question 17

The main difference in the sales journal under the perpetual and periodic inventory system is:

Accepted Answer

The main difference in the sales journal under the perpetual and periodic inventory system is that the perpetual system has a column to record the cost of goods sold, which is updated in real-time as inventory is sold, while the periodic system does not have this column and only calculates the cost of goods sold at the end of the accounting period. None of the other options mentioned are specific differences between the two systems.

Question 18

Alani's Hawaiian segment had revenues of $2,075 million, operating income of $1,500 million, and average assets of $1,450 million. The Hawaiian segment return on assets is:

Accepted Answer

Return on assets (ROA) is calculated as operating income divided by average total assets.

ROA = Operating income / Average total assets

Substituting the given values: 
ROA = $1,500 million / $1,450 million 
ROA = 1.0344 or 103.44%

The Hawaiian segment return on assets is 103.4%, which is closest to option E.

Question 19

Chandler Company purchased merchandise on credit from Lighting Supply for $5,600. Chandler would record this sale in the:

Accepted Answer

The Purchases journal is used to record all credit purchases of merchandise.

Question 20

Enterprise-resource planning software:

Accepted Answer

Enterprise-resource planning software refers to programs that help manage a company's vital operations such as finance, inventory, manufacturing, and human resources. It integrates all these functions into a single system and provides a comprehensive view of the company's business processes.

Quiz 7: Accounting Information Systems