Deck 7: Accounting Information Systems

Question 1

An accounting information system is said to have good flexibility, if it ________.

A) works smoothly with the business's employees and organizational structure
B) safeguards a business's assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time

Answer 1

D

Question 2

Because of the risk of fraud, electronic invoices and electronic receiving reports are seldom used in accounting information systems.

Answer 2

False

Question 3

Prenumbered source documents provide necessary control in a system by automatically assigning a sequential number to each new transaction.

Answer 3

True

Question 4

An accounting information system creates the structure to encourage adherence to management policies.

Question 5

Which of the following is true of an effective accounting information system?

A) It has little influence in improving a company's internal control activities.
B) The cost of using an accounting information system is the same for both small and large businesses.
C) A compatible accounting information system works smoothly with the business's employees and organizational structure.
D) Large private companies prefer a manual accounting information system since their financial statements are not audited.

Question 6

An effective accounting information system that provides relevant information ________.

A) increases the likelihood of fraud and errors
B) reduces the cost of employing an accounting information system
C) improves decision making and reduces uncertainty
D) improves the accuracy of data entry when manual

Question 7

An accounting information system is said to have good control characteristics, if it ________.

A) works smoothly with the business's employees and organizational structure
B) safeguards a business's assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time

Question 8

An accounting information system is said to be relevant, if it ________.

A) works smoothly with the business's employees and organizational structure
B) safeguards a business's assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time

Question 9

To safeguard a business's assets and reduce the likelihood of fraud and errors, its accounting information system ________.

A) should be manual
B) must be flexible to accommodate changes in a business over time
C) should work smoothly with the business's employees
D) must provide adequate controls of a business's assets and data

Question 10

The collection of time records is an accounting information system activity that is classified as a business transaction involving the sale of merchandise inventory.

Question 11

List and briefly discuss the three basic components of an accounting information system.

Question 12

An accounting information system collects, records, stores, and processes accounting data to produce information that is useful for decision makers.

Question 13

A business must only invest in an accounting information system in which the benefits received outweigh the cost of the system.

Question 14

An accounting information system is said to have good compatibility, if it ________.

A) works smoothly with the business's employees and organizational structure
B) safeguards a business's assets and reduces the likelihood of fraud and errors
C) provides information that will improve decision making and reduce uncertainty
D) accommodates changes in the business over time

Question 15

For each of the following business transactions, list two examples of related accounting information system (AIS) activities:

Question 16

Which of the following accounting information system activities is completed when merchandise inventory is sold?

A) preparation and payment of payroll
B) receipt of customer payment
C) receipt of goods or services
D) payment for goods or services

Question 17

Which of the following is an accounting information system activity that can be classified as a payroll business transaction?

A) approval of new employees
B) receipt of customer payment
C) processing of vendor invoices
D) payment for goods or services

Question 18

Examples of source documents in an accounting information system include the statement of cash flows and sales journal.

Question 19

An accounting information system has three basic components: source documents and input devices, processing and storage, and internal controls.

Question 20

A source document provides the evidence and data for accounting transactions.

Question 21

In a manual accounting information system, reports and financial statements must be created using Word documents, Excel spreadsheets, or PowerPoint.

Question 22

Which of the following is an example of a storage device in an accounting information system?

A) monitor
B) network
C) printer
D) server

Question 23

Generally, all transactions are recorded in a special journal as well as the general journal.

Question 24

Which of the following is true of outputs in an accounting information system?

A) In a manual system, reports and financial statements must be created using Word documents, Excel spreadsheets, or PowerPoint.
B) In a computerized system, the software can generate reports instantaneously that can never be manipulated.
C) Examples of outputs in an accounting information system include purchase invoices, bank checks, and sales invoices.
D) Since the output in an accounting information system is audited and error-free, it provides the evidence and data for accounting transactions.

Question 25

Which of the following is true of source documents in an accounting information system?

A) All journal entries can be considered as source documents in an accounting information system.
B) Source documents provide control and reliability in an accounting information system.
C) A manual document cannot be considered as a source document in an accounting information system.
D) In a manual accounting information system, source documents refer to financial statements.

Question 26

The main computer where data are stored, which can be accessed from many different computers, is known as software.

Question 27

Which of the following serves as the "journal of last resort?"

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

Question 28

Which of the following is an example of a source document in a computerized accounting information system?

A) statement of cash flows
B) balance sheet
C) bank checks
D) general ledger

Question 29

Which of the following is an example of a source document in a computerized accounting information system?

A) purchase invoices
B) balance sheet
C) cash payments journal
D) income statement

Question 30

Companies are now spending less amounts of cash to ensure that their data and information are secure.

Question 31

Which of the following is true of the comparison between a manual and a computerized accounting information system?

A) In both manual and computerized systems, reports and financial statements must be created using Word documents, Excel spreadsheets, or PowerPoint.
B) In a computerized system, the software can generate financial reports instantaneously that can never be manipulated.
C) In a manual system, data are contained in paper documents, which are often stored in filing cabinets and off-site document warehouses; whereas in a computerized system, data are stored on a main computer called a server.
D) In both manual and computerized systems, processing data includes manually journalizing transactions and posting to the accounts.

Question 32

Which of the following is true of data processing and storage in a computerized information system?

A) In a computerized accounting information system, processing includes manually journalizing transactions and posting to the accounts.
B) In a computerized accounting information system, there will be a main centralized computer where data is stored, which cannot be accessed from any other computers.
C) In both computerized and manual systems, all data are contained in paper documents and are often stored in filing cabinets and off-site document warehouses.
D) In a computerized accounting information system, companies need to spend large amounts of cash to ensure that their data and information are secure.

Question 33

In a computerized accounting information system, all data are contained in paper documents that are often stored in filing cabinets and off-site document warehouses.

Question 34

Which of the following is an output device in an accounting information system?

A) keyboard
B) internet protocol
C) printer
D) mouse

Question 35

The main computer where data is stored, which can be accessed from many different computers is known as a(n) ________.

A) internet protocol
B) RAM
C) server
D) router

Question 36

In an accounting information system, source documents are the documents which ________.

A) are audited and presented to the Securities and Exchange Commission
B) detail the strategic planning of the business
C) have complete information about the financial statements
D) provide the evidence for accounting transactions

Question 37

Which of the following is an input device in an accounting information system?

A) keyboard
B) internet protocol
C) printer
D) router

Question 38

In an accounting information system, outputs are the reports used for decision making, which include the financial statements.

Question 39

Since a computerized system uses software to process transactions, employees are no longer required to manually journalize and post transactions to the accounts.

Question 40

A general ledger is an accounting journal designed to record one specific type of transaction.

Question 41

Credit sales of assets other than merchandise inventory occur infrequently and are recorded in the ________.

A) sales journal
B) cash receipts journal
C) accounts receivable journal
D) general journal

Question 42

Depreciation expense is recorded in a ________.

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

Question 43

List the four special journals that are often used in a manual accounting information system. State what types of transactions are recorded in each of these special journals.

Question 44

A subsidiary ledger is ________.

A) an accounting journal designed to record a specific type of transaction
B) a created list of accounts used by a business entity to define each class of items for which cash is spent or received
C) a complete record of business transactions recorded in a ledger over the life of a company
D) a record of accounts that provide supporting details on individual balances, the total of which appears in a general ledger account

Question 45

The accounts payable subsidiary ledger ________.

A) does not indicate the amount owed to each vendor
B) shows only a single total for the amount owed on account
C) lists vendors in alphabetical order, along with amounts paid to the vendors and the remaining amounts owed to them
D) has a format that is entirely different from an accounts receivable subsidiary ledger

Question 46

The accounts payable subsidiary ledger lists each vendor along with amounts paid to the vendors and the remaining amounts owed to them.

Question 47

State the purpose of a subsidiary ledger? What is included in the accounts receivable subsidiary ledger?

Question 48

The Accounts Receivable balance in the general ledger may or may not equal the sum of the accounts in the accounts receivable subsidiary ledger.

Question 49

The sales journal is used for all sales of merchandise inventory.

Question 50

A control account ________.

A) does not appear on the balance sheet
B) has a balance that equals the sum of the balances in a group of related accounts in a subsidiary ledger
C) is equivalent to a contra account and represents the offsetting nature of debits and credits on a firm's financial statements
D) holds individual accounts that support a general ledger account

Question 51

Which of the following is true of an accounts receivable subsidiary ledger?

A) It does not include a receivable account for each customer, but includes a cumulative account for all customers.
B) It contains information about the amount each customer purchased on credit, but excludes the customer name.
C) The total of the accounts in the accounts receivable subsidiary ledger must equal the accounts receivable balance in the general ledger.
D) Companies keep an accounts payable subsidiary ledger that is entirely different from the accounts receivable subsidiary ledger.

Question 52

Entries in the sales journal are posted to both the accounts receivable subsidiary ledger and the general ledger.

Question 53

A subsidiary ledger is a record of accounts that provides supporting details on individual balances, the total of which appears in a general ledger account.

Question 54

After posting entries in a sales journal to the general ledger, the Accounts Receivable balance in the general ledger should equal the sum of the individual customer balances in the accounts receivable subsidiary ledger.

Question 55

Blue Company has four customers: A, B, C, and D. The accounts receivable balance in the general ledger is $9,383 and the accounts receivable subsidiary ledger of customers A, C, and D have $1,546, $2,696, and $3,440, respectively. Calculate the amount in the accounts receivable subsidiary ledger account of customer B.

A) $7,682
B) $3,247
C) $2,391
D) $1,701

Question 56

A sales journal is ________.

A) a special journal used to record all the cash sales
B) used to record the sales of assets other than merchandise inventory
C) a special journal used to record credit sales
D) a general journal used to record the adjustments in revenue account

Question 57

Sales on account are recorded in a cash receipts journal.

Question 58

A company has four vendors and the accounts payable subsidiary ledger shows the following balances. Calculate the accounts payable balance in the general ledger.

A) $422,295
B) $542,425
C) $275,821
D) $266,604

Question 59

Adjusting entries are recorded in the ________.

A) cash payments journal
B) purchases journal
C) cash receipts journal
D) general journal

Question 60

A special journal is ________.

A) an accounting journal designed to record a specific type of transaction
B) an accounting journal that holds individual accounts that support a specific general ledger account
C) a record of accounts that provides supporting details on individual balances, the total of which appears in a general ledger account
D) a created list of the accounts used by a business entity to define each class of items for which cash is spent or received

Question 61

Which of the following is not typically shown as a separate column in a cash receipts journal that uses the perpetual inventory system?

A) Interest Revenue CR column
B) Cost of Goods Sold DR, Merchandise Inventory CR column
C) Sales Revenue CR column
D) Other Accounts CR column

Question 62

Deal Corporation sells a product for $500 on account to Liza Masters. This transaction will be recorded in the ________.

A) cash payments journal
B) sales journal
C) cash receipts journal
D) purchase journal

Question 63

Every transaction recorded in the cash receipts journal includes a ________.

A) credit to Cash
B) debit to Accounts Receivable
C) credit to Accounts Receivable
D) debit to Cash

Question 64

Tangent Corporation sold a product for $7,150 to Michael Cardon on credit. The cost of goods sold is $5,650. Assuming the firm is following a perpetual inventory system and using a sales journal, it will record $5,650 in the ________.

A) Accounts Receivable DR, Sales Revenue CR column
B) Cost of Goods Sold DR, Merchandise Inventory CR column
C) Merchandise Inventory DR, Cost of Goods Sold CR column
D) Sales Revenue DR, Accounts Receivable CR column

Question 65

If a business uses the periodic inventory system, the sales journal will ________.

A) record both the cash and credit sales
B) include a Purchase DR and Account Receivable CR column
C) exclude the Accounts Receivable DR and Sales Revenue CR column
D) exclude the Cost of Goods Sold DR and Merchandise Inventory CR column

Question 66

A CR.5 posting reference in a subsidiary ledger signifies that the ________.

A) posting is transferred from the cash receipts journal, page 5
B) transaction on page number 5 is credited
C) amount credited is after a 5% discount
D) sales on credit is expected to be paid within five days

Question 67

Use the following sales journal to record the preceding transactions.

Question 68

Centium Corporation sold goods to John Dunn for $1,000 on account. Cost of goods sold was $745. Centium uses a perpetual inventory system and special journals. The cost of goods sold is recorded in the ________ column of the sales journal.

A) Accounts Receivable DR, Sales Revenue CR
B) Cost of Goods Sold CR, Merchandise Inventory DR
C) Cost of Goods Sold DR, Merchandise Inventory CR
D) Sales Revenue DR, Accounts Receivable CR

Question 69

Hexagon Corporation sold a product on credit for $2,235 to Merin Lynch. The cost of goods sold was $1,324. Assuming the firm is following a perpetual inventory system and using a sales journal, it will record $2,235 in the ________.

A) Accounts Receivable CR, Sales Revenue DR column
B) Cost of Goods Sold DR, Merchandise Inventory CR column
C) Merchandise Inventory DR, Cost of Goods Sold CR column
D) Accounts Receivable DR, Sales Revenue CR column

Question 70

Unlike the sales journal, entries in the cash receipts journal are posted monthly to the accounts receivable subsidiary ledger and daily to the general ledger.

Question 71

Which of the following is true of a sales journal prepared under the perpetual inventory system?

A) It includes a Cost of Goods Sold DR, Merchandise Inventory CR column.
B) It records both cash and credit sales transactions.
C) All transactions recorded in a sales journal also are entered in the general journal.
D) It cannot be used with a perpetual inventory system.

Question 72

MultiMet Corporation sold merchandise for $4,450 to Simpsons, Inc. on account. The cost of goods sold was $1,185. MultiMet uses a perpetual inventory system and special journals. The $4,450 is recorded as ________.

A) an entry in the general journal
B) Accounts Receivable DR, Sales Revenue CR column of the sales journal
C) Merchandise Inventory DR column of the purchases journal
D) Accounts Receivable CR column of cash receipts journal

Question 73

In the cash receipts journal, the Other Accounts CR column is used when a transaction involves a credit entry that is not listed in the headings (columns) of the cash receipts journal.

Question 74

Cameron Enterprises uses special journals. The company borrowed $10,000 from First Bank. This transaction is recorded in the ________.

A) general journal
B) debt journal
C) cash receipts journal
D) cash payments journal

Question 75

The cash receipts journal is a special journal used to record business transactions of all cash receipts and credit sales.

Question 76

In a cash receipts journal, ________.

A) cash sales are recorded in the Accounts Receivable CR column and the Cash DR column
B) collections on account are recorded in the Accounts Receivable DR column and the Cash DR column
C) the miscellaneous cash receipt transactions are ignored
D) the cash sales are recorded in the Sales Revenue CR column

Question 77

The sale of merchandise inventory for cash is recorded in the ________.

A) general journal
B) cash receipts journal
C) sales journal
D) accounts receivable journal

Question 78

In a perpetual inventory system, when cash sales are recorded, ________.

A) merchandise inventory decreases and cost of goods sold decreases
B) sales revenue increases and cash decreases
C) sales revenue increases and cost of goods sold decreases
D) merchandise inventory decreases and cost of goods sold increases

Question 79

Which of the following is true of posting from a sales journal to the general ledger?

A) Entries in the sales journal are posted to either the accounts receivable subsidiary ledger or the general ledger.
B) Individual accounts receivable are posted daily from the sales journal to the accounts receivable subsidiary ledger.
C) Even though the sales journal is posted monthly to the subsidiary ledger, it is a reliable record of the amount received from each customer.
D) Under a perpetual inventory system, the sales journal will not have the Cost of Goods Sold DR and Merchandise Inventory CR column.

Question 80

Which of the following will be recorded in the Other Accounts CR column of the cash receipts journal?

A) cash sales
B) receipt of interest revenue
C) receipt of accounts receivable
D) sales discounts