Deck 7: Accounting Information Systems

Question 1

An accounting information system should be cost effective; that is, the benefits of the information must outweigh the cost of providing it.

Answer 1

True

Question 2

An accounting system has flexibility if it is able to be used by many different companies at the same time.

Answer 2

False

Question 3

A cash receipts journal can be used to record all transactions involving cash coming into the business, regardless of the source.

Answer 3

True

Question 4

A control account and subsidiary ledger can be established for inventory.

Question 5

The accounts payable subsidiary ledger provides detailed information about amounts owed to creditors.

Question 6

An accounts receivable subsidiary ledger has all the detailed information about the cash sales to individual customers.

Question 7

Control accounts are always located in the general ledger.

Question 8

General ledger accounting systems are software programs that integrate the various accounting functions related to sales, purchases, cash receipts and disbursements, and payroll.

Question 9

Using special journals can save time in posting because column totals are often posted rather than individual entries.

Question 10

The cash payments journal only has one column because all entries recorded in this journal require a credit to the Cash account.

Question 11

A one-column purchases journal is used to record purchases of merchandise on account.

Question 12

A cash payments journal should not be used to record transactions which require payment by check.

Question 13

Enterprise resource planning systems integrate all aspects of the organization, including accounting, sales, human resource management, and manufacturing.

Question 14

The total of the individual account balances in the accounts receivable subsidiary ledger should agree with the total of the individual account balances in the accounts payable subsidiary ledger.

Question 15

A subsidiary ledger provides up-to-date information on specific account balances.

Question 16

A subsidiary ledger is a group of control accounts which provides information to the managers for controlling the operation of the company.

Question 17

An advantage of using a subsidiary ledger is that one employee must post to both the subsidiary ledger and the general ledger.

Question 18

If a transaction cannot be recorded in a special journal, it indicates that the company should adopt an electronic accounting system.

Question 19

A debit column for Sales Returns and Allowances may be found in the cash payments journal.

Question 20

Special journals are used to record unique transactions which do not occur very often.

Question 21

Which of the following is not a basic principle of designing and developing an effective accounting information system?

A) Approval by the SEC
B) Usefulness
C) Flexibility
D) Cost effectiveness

Question 22

The accounting environment does not change as a result of

A) technological advances.
B) government regulation.
C) the double entry system.
D) organizational growth.

Question 23

The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted.

Question 24

A company will usually replace a manual accounting information system with an electronic system as the operations increase in

A) efficiency.
B) complexity.
C) simplicity.
D) productivity.

Question 25

Transaction amounts recorded in the general journal are never posted to accounts in the subsidiary ledger.

Question 26

An accounting information system involves data collection, data processing, and information dissemination.

Question 27

When special journals are employed, all postings must be monthly or daily but cannot be both.

Question 28

To be useful, the information outputs of a system should be

A) relevant, reliable, timely, and accurate.
B) reliable, flexible, understandable and timeless.
C) such that one report meets all different users needs.
D) distributed only to management personnel.

Question 29

The principles of developing an accounting information system do not include

A) usefulness.
B) flexibility.
C) cost effectiveness.
D) elimination of human involvement.

Question 30

Only transactions that cannot be entered in a special journal are recorded in the general journal.

Question 31

Postings are generally made more frequently to the general ledger control accounts than to the individual accounts in the subsidiary ledgers.

Question 32

The principle of an efficient accounting system that states that an accounting system should accommodate a variety of users is

A) cost effectiveness.
B) flexibility.
C) useful output.
D) implementation.

Question 33

Totaling the columns of a journal and proving the equality of the totals is called footing and cross-footing a journal.

Question 34

The basic principles of an accounting information system are cost awareness, usefulness, and fixed structure.

Question 35

The amounts appearing in the Merchandise Inventory column of the cash payments journal are posted individually to the accounts in the accounts payable subsidiary ledger.

Question 36

A student should recognize a need to study manual accounting systems because

A) the structure of electronic systems differs greatly from manual systems.
B) all small companies only use manual accounting systems.
C) the software and hardware of electronic systems vary greatly, which makes manual procedures more practical to study.
D) companies that use manual systems hire more accountants.

Question 37

Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger at the end of an accounting period.

Question 38

In developing an accounting system, cost effectiveness does not imply that

A) the benefits obtained from the system outweigh the costs.
B) an electronic system must be cheaper than the system it is replacing.
C) the system should be cost effective.
D) the value of an accounting report should be at least equal to the cost of producing it.

Question 39

When control and subsidiary accounts are involved, there must be a dual posting.

Question 40

Which of the following is a true statement about manual and electronic accounting systems?

A) Few small companies begin with manual systems.
B) The design and structure of manual and electronic systems are essentially the same.
C) Many companies convert from electronic to manual systems.
D) The design and structure of manual and electronic systems are fundamentally different.

Question 41

A sales journal is used to record

A) only cash sales of merchandise.
B) sales of all assets on credit and for cash.
C) only credit sales of merchandise.
D) credit sales of merchandise, sales returns and allowances, and sales discounts.

Question 42

Postings are made daily to subsidiary ledgers so that

A) employees are kept busy.
B) debits equal credits.
C) individual account information is kept current.
D) the control account will balance to the subsidiary ledger.

Question 43

A subsidiary ledger is

A) used in place of the general ledger if the general ledger is destroyed or stolen.
B) a group of accounts used by branches and subsidiaries of a corporate business.
C) a group of accounts with a common characteristic that provides detailed information about a control account in the general ledger.
D) used to post excess transactions if a general ledger account becomes full during an accounting period.

Question 44

Postings are made daily to the

A) Accounts Receivable control account.
B) Accounts Payable control account.
C) Accounts Receivable subsidiary ledger.
D) control accounts in the general ledger.

Question 45

In which journal would a cash purchase of merchandise inventory be recorded?

A) Purchase journal
B) General journal
C) Cash payments journal
D) None of these

Question 46

The balance of a control account in the general ledger

A) must always be zero.
B) must equal the amount of total assets.
C) is always greater than the composite balance of individual accounts in a related subsidiary ledger.
D) must equal the composite balance of individual accounts in a related subsidiary ledger.

Question 47

If a transaction cannot be recorded in a special journal

A) the company must refuse to enter into the transaction.
B) it is recorded in the general journal.
C) it is recorded directly in the accounts in the general ledger.
D) it is recorded as an adjustment on the work sheet.

Question 48

In which journal would a customer's partial payment on account be recorded?

A) Sales journal
B) Cash receipts journal
C) General journal
D) Cash payments journal

Question 49

A subsidiary ledger frees the general ledger from details of

A) individual balances.
B) external transactions.
C) internal transactions.
D) the control account.

Question 50

A company would not likely use subsidiary ledgers for

A) inventory.
B) owner's capital.
C) equipment.
D) accounts receivable.

Question 51

The composite balance of individual accounts in the accounts payable subsidiary ledger must

A) equal the composite balance of the individual accounts in the accounts receivable subsidiary ledger.
B) always be zero.
C) equal the balance of the accounts payable account in the general ledger.
D) agree with the total of the Accounts payable column in the cash receipt journal.

Question 52

A company which uses special journals should record a transaction involving the purchase of merchandise for cash in a

A) one column purchases journal.
B) multi-column purchases journal.
C) cash payments journal.
D) general journal.

Question 53

The one characteristic that all entries recorded in a multi-column purchases journal have in common is a

A) credit to the Cash account.
B) debit to the Cash account.
C) debit to the Accounts Payable account.
D) credit to the Accounts Payable account.

Question 54

Accounts Receivable and Accounts Payable are examples of

A) nominal accounts.
B) controlling accounts.
C) subsidiary ledger accounts.
D) both nominal accounts and controlling accounts.

Question 55

The one characteristic that all entries recorded in a cash payments journal have in common is

A) that they all represent purchases of merchandise.
B) a credit to the cash account.
C) that they are all posted to the accounts payable subsidiary ledger.
D) a debit to the accounts payable or purchases accounts.

Question 56

If merchandise from a cash sale is returned by a customer for a refund, the sales return is recorded in the

A) general journal.
B) cash receipts journal.
C) cash payments journal.
D) sales journal.

Question 57

The one characteristic that all entries recorded in a cash receipts journal have in common is

A) a credit to the Cash account.
B) that they all represent collections from customers.
C) that they originate from the sales of merchandise.
D) a debit to the Cash account.

Question 58

The individual amounts in the sales journal are posted to the accounts receivable subsidiary ledger

A) daily.
B) weekly.
C) monthly.
D) yearly.

Question 59

A one column purchases journal indicates that

A) only purchases of merchandise on account can be recorded.
B) all purchases of merchandise can be recorded.
C) all acquisitions on account can be recorded.
D) another column must be added so that debits and credits can be recorded.

Question 60

Postings to the control accounts in the general ledger are made

A) annually.
B) daily.
C) monthly.
D) weekly.

Question 61

The use of special journals to record transactions

A) eliminates the need for a general ledger.
B) can save time in the posting process.
C) eliminates the need for a general journal.
D) should only be used if the volume of transactions is small.

Question 62

Entries in a sales journal are

A) posted only to accounts in an accounts receivable subsidiary ledger.
B) posted only to accounts in the general ledger.
C) posted to accounts in an accounts receivable subsidiary ledger and to accounts in the general ledger.
D) never posted.

Question 63

A company uses a sales journal, cash receipts journal, purchases journal, cash payments journal, and a general journal. A cash sales return would be recorded in the

A) sales journal.
B) cash receipts journal.
C) cash payments journal.
D) general journal.

Question 64

The individual amounts in the Accounts Payable column in the cash payments journal are posted to the subsidiary ledger

A) daily.
B) monthly.
C) weekly.
D) yearly.

Question 65

The entries in a sales journal will show

A) all sales of merchandise.
B) the cash sales of the company.
C) the credit sales of merchandise.
D) all sales of the company.

Question 66

Which one of the following columns in a cash receipts journal is not posted in total to an account in the general ledger?

A) Cash column
B) Sales Discount column
C) Accounts Receivable column
D) Other Accounts column

Question 67

If an owner withdraws cash for personal use, the transaction should be recorded in the

A) sales journal.
B) cash receipts journal.
C) general journal.
D) cash payments journal.

Question 68

The entries recorded in the Other Accounts column of a cash payments journal

A) are posted to the accounts payable subsidiary ledger daily.
B) are posted individually to accounts in the general ledger.
C) are not posted individually but are posted as a column total to the general ledger.
D) do not require posting.

Question 69

Correcting entries are journalized in

A) a special journal.
B) the general journal.
C) the general ledger.
D) a correcting journal.

Question 70

Journalizing in a sales journal will not

A) require a debit to Accounts Receivable.
B) show a sales invoice number.
C) affect the reference column of the journal.
D) include a credit to the Sales account.

Question 71

If a transaction cannot be recorded in a special journal, it is

A) not recorded.
B) a correcting entry.
C) recorded in the general journal.
D) an error.

Question 72

Posting a sales journal to the accounts in the general ledger requires a

A) debit to Cash and a credit to Sales.
B) debit to Sales and a credit to Inventory.
C) debit to Accounts Receivable and a credit to Inventory.
D) debit to Accounts Receivable and a credit to Sales.

Question 73

Which of the following is not a special journal?

A) Sales journal
B) Purchases journal
C) General journal
D) Cash receipts journal

Question 74

Cash from sales of merchandise will be recorded in the

A) purchases journal.
B) sales journal.
C) cash receipts journal.
D) general journal.

Question 75

Debit postings to the individual accounts in an accounts receivable subsidiary ledger generally come from the

A) sales journal.
B) cash receipts journal.
C) purchases journal.
D) cash payments journal.

Question 76

All of the column totals in the cash receipts journal are posted to general ledger accounts except the

A) Accounts Receivable column total.
B) Cash column total.
C) Sales column total.
D) Other Accounts column total.

Question 77

If a company purchases merchandise for cash, the transaction should be recorded in the

A) purchases journal.
B) general journal.
C) cash payments journal.
D) sales journal.

Question 78

Postings from the purchases journal to the general ledger are made

A) daily.
B) monthly.
C) weekly.
D) yearly.

Question 79

Adjusting entries are recorded

A) only on the worksheet.
B) only in the general ledger.
C) in the general journal.
D) in the special journals.

Question 80

Entries in a sales journal

A) are made from sales invoices.
B) will indicate the invoice number in the reference column of the sales journal.
C) will occupy two lines of the sales journal.
D) indicate either a cash debit or accounts receivable debit.