Question 1

A furniture company purchases a new milling machine costing $350 000 on account. Which of the following statements is true?

Accepted Answer

A) This transaction would be recorded in the purchases book and would include a credit to Cash. 
B) This transaction would be recorded in the cash payments book and would include a debit to Purchases. 
C) This transaction would be recorded in the general journal and would include a credit to Payables/Creditors. 
D) This transaction would be recorded in the general journal and would include a credit to Equipment. 
A) This transaction would be recorded in the purchases book and would include a credit to Cash. 
B) This transaction would be recorded in the cash payments book and would include a debit to Purchases. 
C) This transaction would be recorded in the general journal and would include a credit to Payables/Creditors. 
D) This transaction would be recorded in the general journal and would include a credit to Equipment. C

Question 2

The difference between a cash book and a cash journal is that the cash book allows for the use of analysis columns.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is a disadvantage of using the general journal for recording transactions?

Accepted Answer

A) Using the general journal provides no grouping of transactions by type. 
B) Using the general journal lessens the risk of omission of entries. 
C) Using the general journal provides more details on each transaction. 
D) Using the general journal makes fraud easier to discover. 
A) Using the general journal provides no grouping of transactions by type. 
B) Using the general journal lessens the risk of omission of entries. 
C) Using the general journal provides more details on each transaction. 
D) Using the general journal makes fraud easier to discover. A

Question 4

Which of the following is not a component of internal control in financial areas?

Accepted Answer

A) Approval authority 
B) Good records maintenance 
C) Consolidation of duties 
D) Safeguards 
A) Approval authority 
B) Good records maintenance 
C) Consolidation of duties 
D) Safeguards

Question 5

Determining the difference between the balance on the bank statement and the balance in the cash account is:

Accepted Answer

A) reconciling the bank statement. 
B) auditing the cash account. 
C) preparing the trial balance. 
D) running a spot check. 
A) reconciling the bank statement. 
B) auditing the cash account. 
C) preparing the trial balance. 
D) running a spot check.

Question 6

Which of the following is not a name used to describe the subsidiary record in which credit transactions are usually first recorded?

Accepted Answer

A) Journal 
B) Book of original entry 
C) Ledger 
D) Day book 
A) Journal 
B) Book of original entry 
C) Ledger 
D) Day book

Question 7

With a computerised accounting system, there is no need for:

Accepted Answer

A) internal controls. 
B) checks and balances. 
C) updating each subsystem manually. 
D) data backups. 
A) internal controls. 
B) checks and balances. 
C) updating each subsystem manually. 
D) data backups.

Question 8

The move to e-commerce has created new and varied difficulties in the area of internal control.

Accepted Answer

A) True 
 B)False

Question 9

When petty cash is replenished, the transaction to replenish it includes:

Accepted Answer

A) a debit to petty cash. 
B) a credit to petty cash. 
C) a debit to cash. 
D) a credit to cash. 
A) a debit to petty cash. 
B) a credit to petty cash. 
C) a debit to cash. 
D) a credit to cash.

Question 10

In a cash payments journal, the total column would be:

Accepted Answer

A) credited to the cash account. 
B) credited to the purchases account. 
C) debited to the sales account. 
D) credited to the sales returns account 
A) credited to the cash account. 
B) credited to the purchases account. 
C) debited to the sales account. 
D) credited to the sales returns account

Question 11

Which of the following would not be included in a good recording system?

Accepted Answer

A) A well thought out chart of accounts 
B) A method of cross-referencing transactions 
C) The elimination of subsidiary records 
D) A well-developed system of ledger accounts 
A) A well thought out chart of accounts 
B) A method of cross-referencing transactions 
C) The elimination of subsidiary records 
D) A well-developed system of ledger accounts

Question 12

Like the trial balance, internal control procedures can identify or prevent all errors before they are carried forward to the financial statements.

Accepted Answer

A) True 
 B)False

Question 13

A sales book is used to record sales returns.

Accepted Answer

A) True 
 B)False

Question 14

An organisation determines that any check for an amount greater than $5 000 must require approval from the controller. This is an example of:

Accepted Answer

A) segregation of duties. 
B) approval authority. 
C) rotating key jobs. 
D) reconciling the bank statement. 
A) segregation of duties. 
B) approval authority. 
C) rotating key jobs. 
D) reconciling the bank statement.

Question 15

Which of the following is true of a computerised accounting system?

Accepted Answer

A) Card files are used for employees, creditors and debtors. 
B) A coding system is used which does not require linkage to the chart of accounts. 
C) A computerised accounting system eliminates the need for internal controls. 
D) Because a computerised accounting system updates automatically, the files do not need to be backed up. 
A) Card files are used for employees, creditors and debtors. 
B) A coding system is used which does not require linkage to the chart of accounts. 
C) A computerised accounting system eliminates the need for internal controls. 
D) Because a computerised accounting system updates automatically, the files do not need to be backed up.

Question 16

C. Palmer opens a new computer sales and repair business. His assets are: Premises $700 000, Equipment $100 000, Inventory $150 000, and Cash $30 000. His liabilities are: Payables - M Rice $25 000. The journal entry to record the opening would include:

Accepted Answer

A) a credit to Capital for $955 000. 
B) a debit to Capital for $955 000. 
C) a credit to Capital for $1 050 000. 
D) a debit to Capital for $1 050 000. 
A) a credit to Capital for $955 000. 
B) a debit to Capital for $955 000. 
C) a credit to Capital for $1 050 000. 
D) a debit to Capital for $1 050 000.

Question 17

Which of the following is not an advantage of using a control account?

Accepted Answer

A) A control account provides a check and balance on the postings from the subsidiary records. 
B) A control account contributes to internal control by allowing a different person to keep the control account than the person making the more detailed posting. 
C) Balances from the control account are readily available. 
D) Agreement between the control account and the ledger account guarantees accuracy in the ledger account. 
A) A control account provides a check and balance on the postings from the subsidiary records. 
B) A control account contributes to internal control by allowing a different person to keep the control account than the person making the more detailed posting. 
C) Balances from the control account are readily available. 
D) Agreement between the control account and the ledger account guarantees accuracy in the ledger account.

Question 18

The control account for receivables has a balance of $150 000. The receivables ledger account has a debit balance of $150 000. This agreement shows that the account is error free.

Accepted Answer

A) True 
 B)False

Question 19

The bank statement arrives and shows a balance of $2 468. The cash account balance is $3 128. In reconciling the bank statement, which of the following would require a deduction from the cash account balance?

Accepted Answer

A) Unpresented cheques totalling $ 357.00. 
B) A dishonoured cheque in the amount of $150. 
C) A deposit made on the day of the statement which does not appear on the statement in the amount of $319. 
D) Interest received on the account of $35. 
A) Unpresented cheques totalling $ 357.00. 
B) A dishonoured cheque in the amount of $150. 
C) A deposit made on the day of the statement which does not appear on the statement in the amount of $319. 
D) Interest received on the account of $35.

Question 20

The Ledger column is a purchases book is used:

Accepted Answer

A) to record the amount to be debited to the purchases account. 
B) to record the amount to be credited to the purchase account. 
C) to record items that don't fit under any of the main headings in the book. 
D) to record purchase returns. 
A) to record the amount to be debited to the purchases account. 
B) to record the amount to be credited to the purchase account. 
C) to record items that don't fit under any of the main headings in the book. 
D) to record purchase returns.

A furniture company purchases a new milling machine costing $350 000 on account. Which of the following statements is true?

The difference between a cash book and a cash journal is that the cash book allows for the use of analysis columns.

Which of the following is a disadvantage of using the general journal for recording transactions?

Which of the following is not a component of internal control in financial areas?

Determining the difference between the balance on the bank statement and the balance in the cash account is:

Which of the following is not a name used to describe the subsidiary record in which credit transactions are usually first recorded?

With a computerised accounting system, there is no need for:

The move to e-commerce has created new and varied difficulties in the area of internal control.

When petty cash is replenished, the transaction to replenish it includes:

In a cash payments journal, the total column would be:

Which of the following would not be included in a good recording system?

Like the trial balance, internal control procedures can identify or prevent all errors before they are carried forward to the financial statements.

A sales book is used to record sales returns.

An organisation determines that any check for an amount greater than $5 000 must require approval from the controller. This is an example of:

Which of the following is true of a computerised accounting system?

C. Palmer opens a new computer sales and repair business. His assets are: Premises $700 000, Equipment $100 000, Inventory $150 000, and Cash $30 000. His liabilities are: Payables - M Rice $25 000. The journal entry to record the opening would include:

Which of the following is not an advantage of using a control account?

The control account for receivables has a balance of $150 000. The receivables ledger account has a debit balance of $150 000. This agreement shows that the account is error free.

The bank statement arrives and shows a balance of $2 468. The cash account balance is $3 128. In reconciling the bank statement, which of the following would require a deduction from the cash account balance?

The Ledger column is a purchases book is used:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters

Exam 5: Accounting Systems and Internal Control

A furniture company purchases a new milling machine costing $350 000 on account. Which of the following statements is true?

The difference between a cash book and a cash journal is that the cash book allows for the use of analysis columns.

Which of the following is a disadvantage of using the general journal for recording transactions?

Which of the following is not a component of internal control in financial areas?

Determining the difference between the balance on the bank statement and the balance in the cash account is:

Which of the following is not a name used to describe the subsidiary record in which credit transactions are usually first recorded?

With a computerised accounting system, there is no need for:

The move to e-commerce has created new and varied difficulties in the area of internal control.

When petty cash is replenished, the transaction to replenish it includes:

In a cash payments journal, the total column would be:

Which of the following would not be included in a good recording system?

Like the trial balance, internal control procedures can identify or prevent all errors before they are carried forward to the financial statements.

A sales book is used to record sales returns.

An organisation determines that any check for an amount greater than $5 000 must require approval from the controller. This is an example of:

Which of the following is true of a computerised accounting system?

C. Palmer opens a new computer sales and repair business. His assets are: Premises $700 000, Equipment $100 000, Inventory $150 000, and Cash $30 000. His liabilities are: Payables - M Rice $25 000. The journal entry to record the opening would include:

Which of the following is not an advantage of using a control account?

The control account for receivables has a balance of $150 000. The receivables ledger account has a debit balance of $150 000. This agreement shows that the account is error free.

The bank statement arrives and shows a balance of $2 468. The cash account balance is $3 128. In reconciling the bank statement, which of the following would require a deduction from the cash account balance?

The Ledger column is a purchases book is used:

Introduction to Accounting

Measuring and Reporting Financial Position

Measuring and Reporting Financial Performance

Recording Transactionsthe Journal and Ledger Accounts

Introduction to Limited Companies

Regulatory Framework for Companies

Measuring and Reporting Cash Flows

Corporate Social Responsibility and Sustainability Accounting

Analysis and Interpretation of Financial Statements

Costvolumeprofit Analysis and Relevant Costing

Full Costing

Planning and Budgeting

Capital Investment Decisions

Filters