Exam 2: Transaction Processing in the AIS

Which of the following is (are) facts about accounting and bookkeeping: (i) Both involve human judgment. (ii) Both require the use of information technology.

Human judgment is important in the accounting cycle for:

Human judgment is least important in:

Which of the following accounting cycle steps is most impacted by information technology?

You're "doing the books" for a local consulting firm as part of an internship. The rest of the consultants don't have much background in accounting; they're very curious about the work you do and your college studies. -Give two specific examples of how accounting is different from bookkeeping. Do not quote or paraphrase from the text.

A company's adjusting entry for prepaid insurance debited insurance expense for $600. If the policy had a six-month duration, how much did it cost originally?

Accounting cycle Explain the meaning of each of the following journal entries. The first is provided as an example. Account debited Account credited Explanation Cash Sales Sold goods / services for cash Inventory Accounts payable Accounts receivable Cash Land Capital stock Interest payable Interest expense

Information technology can be used in: (i) preparing financial statements, (ii) closing the accounts.

Interpreting accounting rules involves:

You're "doing the books" for a local consulting firm as part of an internship. The rest of the consultants don't have much background in accounting; they're very curious about the work you do and your college studies. -Employees in the consulting firm are paid twice a month. They track their own hours and report them via e-mail to you on the 17th for the first half of the month (i.e., on July 17 for the first half of July) and on the 2nd for the second half of the preceding month (i.e., on August 2 for the second half of July). You use Excel to compute each employee's gross pay; you then prepare paychecks using the firm's general ledger software. The senior manager signs the payroll checks and leaves them in each staff member's mailbox. Prepare a list of three internal controls you would recommend for the firm's payroll process.

The American Accounting Association defined:

Which of the following is most true when comparing the information in an income statement with the information in a statement of cash flows?

Which of the following is the best transaction limit for a clerk in a retail store?

In preparing an adjusting entry for depreciation, an accountant debited depreciation expense and credited accumulated depreciation $500. The adjusting entry means (i) the value of the equipment decreased by $500, (ii) future periods will not benefit from the use of the equipment.

Which of the following would provide the most effective internal control for cash?

RKH Corporation requires two signatures on all checks over $1,500. We can therefore assume (i) RKH will never have cash stolen; (ii) checks are sequentially numbered.

Common internal controls associated with source documents include: (i) sequential numbering, (ii) transaction limits, (iii) trial balance.

As a form of internal control, information technology is most likely to prevent which of the following types of errors?