Deck 17: Accounting With Special Journals

Question 1

The compatibility principle requires that an accounting system report useful, understandable, timely, and pertinent information for effective decision making.

Answer 1

False

Question 2

With advanced technology there is no need to trace to its source information that has been entered into an accounting information system.

Answer 2

False

Question 3

Internal controls include policies to direct operations toward common goals, procedures to ensure reliable financial reports, safeguards to protect company assets, and methods to achieve compliance with laws and regulations.

Answer 3

True

Question 4

Input devices are the means to make accounting information available to users.

Question 5

Accurate source documents are crucial to accounting systems to limit the possibility of entering faulty data into the system.

Question 6

The general journal is used for transactions not covered by special journals and for regular, adjusting, closing, and correcting entries.

Question 7

The cost-benefit principle affects all other accounting system principles.

Question 8

A special journal is used to record and post transactions of a similar type.

Question 9

Accounting information systems are so accurate that decision makers in practice do not need a basic knowledge of how the systems work.

Question 10

Due to electronic files and web communication, source documents are no longer required.

Question 11

Input devices include journal entries, keyboards, scanners, and modems.

Question 12

Accounting information systems are designed to capture information about a company's transactions and events and to provide output including financial, managerial, and tax reports.

Question 13

The five basic principles of accounting information systems are control, competency, compatibility, flexibility, and cost-benefit.

Question 14

Auditors rely on accounting system databases when they audit financial statements and a company's controls.

Question 15

The flexibility principle requires that an accounting information system conform to a company's activities, personnel, and structure and adapt to a company's unique characteristics.

Question 16

A typical sales journal is used to record cash sales.

Question 17

With online systems, all information storage should be off-line to protect the data.

Question 18

Accounting information processes are structured to eliminate the need for professional judgment.

Question 19

The purchases journal is used to record cash purchases of merchandise.

Question 20

Accounting information systems collect and process data from transactions and events, organize them in useful forms and communicate results to decision makers.

Question 21

The SAP enterprise resource planning software is already being used to help direct the operations of many of the world's largest companies.

Question 22

Computer networks are links among computers giving different users and different computers access to common databases and programs.

Question 23

The accounts payable ledger is used for storing transactions data regarding individual customers.

Question 24

The accounts payable ledger has a controlling account in the general ledger and a separate subsidiary account for each creditor in the accounts payable ledger.

Question 25

Enterprise resource planning software packages include the programs that manage a company's vital operations.

Question 26

A business segment is a part of a company that is separately identified by its products or services or by the geographic market it serves.

Question 27

Equipment, inventory, and investments can each have its own subsidiary ledger.

Question 28

Off-the-shelf accounting software is not adequate to meet the needs of small businesses.

Question 29

Most transactions for merchandising businesses fall into four groups: sales on credit, purchases on credit, cash receipts, and cash disbursements.

Question 30

Enterprise resource planning software is primarily used for recording journal entries.

Question 31

Most companies use batch processing instead of online processing because batch processing requires continual updating of databases.

Question 32

An advantage of online processing is up-to-date databases.

Question 33

Subsidiary ledgers are not needed in perpetual inventory systems because the accounting system captures sufficient details to support analyses that decision makers need.

Question 34

When posting from special journals, each debit and credit entry is entered as a separate amount.

Question 35

A subsidiary ledger is a listing of individual accounts with a common characteristic.

Question 36

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 37

External users of financial statements are generally uninterested in segment information to understand a company's business activities.

Question 38

Special journals are designed in a manner that is best suited for each business, so good systems design for a business could include collapsing the sales and cash receipts journal into one journal.

Question 39

Under the perpetual inventory system, special journals are not required.

Question 40

Segment return on assets is segment operating income divided by segment average assets.

Question 41

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

Question 42

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

Question 43

Individual transactions in the sales journal are regularly posted to customer accounts in the accounts payable ledger.

Question 44

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.

Question 45

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

Question 46

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

Question 47

Internal control procedures do not include:

A) Procedures to ensure reliable financial reports.
B) Safeguards to protect company assets.
C) Methods to achieve compliance with laws and regulation.
D) Procedures to guarantee against fraud.
E) Policies to direct operations toward common goals.

Question 48

The five fundamental principles of accounting information systems are:

A) Control, accountability, relevance, compatibility, and flexibility.
B) Control, relevance, compatibility, flexibility, and cost-benefit.
C) Control, relevance, compatibility, flexibility, and safety.
D) Control, relevance, compatibility, timeliness, and cost-benefit.
E) Historical cost, relevance, compatibility, flexibility, and cost-benefit.

Question 49

The accounting principle that requires an accounting information system to report useful, understandable, timely, and pertinent information for effective decision-making is the:

A) Control principle
B) Compatibility principle
C) Relevance principle
D) Flexibility principle
E) Cost-benefit principle

Question 50

Segment information is often useful to investors for evaluating a company's profitability, risk, and growth.

Question 51

The flexibility principle of accounting information systems requires that the:

A) Benefits from an activity outweigh the costs of the activity.
B) System report useful, understandable, timely, and pertinent information for effective decision making.
C) System aid managers in controlling and monitoring business activities.
D) System adapt to changes in the company, business environment, and needs of decision makers.
E) System conform with a company's activities, personnel, and structure.

Question 52

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

Question 53

A company using the periodic inventory system does not record the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.

Question 54

The control principle for accounting information systems requires that the:

A) Benefits from an activity outweigh the costs of the activity.
B) System report useful, understandable, timely, and pertinent information for effective decision making.
C) System aid managers in controlling and monitoring business activities.
D) System adapt to changes in the company, business environment, and needs of decision makers.
E) System conform with a company's activities, personnel, and structure.

Question 55

A columnar journal is any journal with only one column.

Question 56

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.

Question 57

A procedure called direct posting of sales invoices can substitute for the special sales journal.

Question 58

The purchases journal is identical under both the periodic and the perpetual inventory systems.

Question 59

To check for accuracy after posting: first a trial balance is completed, then the subsidiary ledgers are tested by preparing a schedule of the controlling account.

Question 60

Effective accounting information systems will do all of the following except:

A) Collect data from transactions and events.
B) Organize data in useful forms.
C) Communicate information to business decision makers.
D) Process data from transactions and events.
E) Eliminate all errors.

Question 61

The use of an Accounts Payable controlling account:

A) Reduces the number of accounts in the subsidiary ledger.
B) Reduces the total number of accounts maintained.
C) Reduces the number of entries in the general journals.
D) Reduces the number of accounts in the general ledger.
E) Increases the number of columns in the journals.

Question 62

A subsidiary ledger:

A) Includes transactions not covered by special journals.
B) Is a listing of all of the accounts of a business.
C) Is a listing of individual accounts with a common characteristic.
D) Is also called a general ledger.
E) Is also called a special journal.

Question 63

Input devices include:

A) Bar-code readers
B) Printers
C) Software
D) Ledgers
E) Database files

Question 64

Assume that a company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, and a general journal. A sales return for credit on account would be recorded in the:

A) Sales journal
B) General journal
C) Cash receipts journal
D) Accounts receivable ledger
E) Cash disbursements journal

Question 65

The basic components of an accounting information system include all but which of the following?

A) Source documents
B) Input devices
C) Cell phones
D) Information processors
E) Information storage

Question 66

A book of original entry that is used to record and post transactions of a similar type is a:

A) Schedule
B) Columnar ledger
C) Special journal
D) General journal
E) Subsidiary ledger

Question 67

An accounts receivable ledger is:

A) A subsidiary ledger that contains an account for each credit customer.
B) A list of the balances of selected accounts in the accounts receivable ledger that is added to show the total amount of the significant accounts receivable outstanding.
C) A book of original entry that is designed and used for recording only a specified type of transaction.
D) The ledger that contains the financial statement accounts of a business.
E) A subsidiary ledger that contains a separate account for each creditor (supplier) to the company.

Question 68

The purchases journal is used for recording:

A) Credit purchases
B) Credit sales
C) Cash sales
D) Cash purchases
E) Cash disbursements

Question 69

Output devices include all of the following except:

A) Printers
B) Monitors
C) LCD projectors
D) Web communication
E) General journals

Question 70

The accounts receivable ledger:

A) Is for recording credit sales.
B) Is for storing transactions data for individual customers.
C) Is for storing transactions data for individual creditors.
D) Is for recording cash receipts from customers.
E) Is also the controlling account.

Question 71

Source documents:

A) Are input devices.
B) Provide the basic information processed by an accounting system.
C) Cannot be electronic files.
D) Store processed information for future use.
E) Provide systems that interpret, transform and summarize data.

Question 72

The special journals of many accounting systems include all the following except:

A) Sales journal
B) General ledger
C) Purchases journal
D) Cash receipts journal
E) Cash disbursements journal

Question 73

Information processors:

A) Include information storage.
B) Interpret, transform, and summarize information for use in analysis and reporting.
C) Are components of an accounting system that keep data in accessible form.
D) Are the means to take information out of an accounting system and make it available to users.
E) Include scanners.

Question 74

Information storage:

A) Eliminates the need for professional judgment.
B) Keeps data in a form accessible to information processors.
C) Provides the basic information processed by an accounting system.
D) Captures information from source documents.
E) Is always in electronic format.

Question 75

The sales journal is used for recording:

A) Credit purchases
B) Credit sales
C) Cash sales
D) Cash purchases
E) All Sales

Question 76

When a company uses special journals, the general journal is used for selected transactions and events including:

A) Recording adjusting transactions.
B) Posting transactions to special journals.
C) Accumulating debits and credits.
D) Collecting detailed listings of amounts.
E) Recording cash receipts.

Question 77

Subsidiary ledgers provide all the following benefits except:

A) Remove excessive detail from the general ledger.
B) Provide up-to-date information on customer or other specific account balances.
C) Aid in error identification for individual accounts.
D) Help with division of labor (recordkeeping tasks).
E) Allow users to record any transactions.

Question 78

A subsidiary ledger that contains a separate account for each supplier of the company is a(n):

A) Controlling account
B) Accounts receivable ledger
C) Accounts payable ledger
D) General ledger
E) Special journal

Question 79

An accounts payable ledger is:

A) A subsidiary ledger that contains an account for each of the company's suppliers.
B) A list of the balances of all the accounts in the accounts receivable ledger that is added to show the total amount of accounts receivable outstanding.
C) A book of original entry that is designed and used for recording only a specific type of transaction.
D) The ledger that contains the financial statement accounts of a business.
E) A subsidiary ledger that contains a separate account for each party that grants both short-term and long-term credit on account to the company.

Question 80

The ledger that contains the financial statement accounts of a company is the:

A) General ledger
B) General journal
C) Special ledger
D) Special journal
E) Column balance ledger