Deck 7: Accounting Information Systems

Question 1

A combination of personnel, records, and procedures that a business uses to provide financial data is known as:

A)an accounting information system.
B)input.
C)output.
D)source documents.

Answer 1

A

Question 2

Keeping accurate records of accounts receivable is an example of which feature of a good accounting information system?

A)control
B)compatibility
C)favourable cost/benefit relationship
D)flexibility

Answer 2

A

Question 3

Hardware is the electronic equipment that includes:

A)computers, monitors, printers and the network.
B)disk drives, software, and servers.
C)servers, databases, and software.
D)servers and software only.

Answer 3

A

Question 4

Internal controls are the methods and procedures used to safeguard assets and eliminate waste.

Question 5

Which of the following is not an element of internal control?

A)assessing cost/benefit relationship
B)safeguarding assets and records
C)authorizing transactions
D)procedures to ensure adherence to company policy

Question 6

Describe the five features of a good accounting information system and give an example of each.

Question 7

Accounting system flexibility creates additional costs to the organization.

Question 8

Managers strive for an accounting system that offers maximum benefits at a minimum cost, known as a good cost/benefit relationship.

Question 9

The Hide and Seek Company has retail outlets at both large malls and small strip malls throughout Canada. Its accounting information system is able to track total revenues by store, by type of mall, by size of the store, by province, and by region. This is an example of which feature of a good information accounting system?

A)flexibility
B)favourable cost/benefit relationship
C)compatibility
D)control

Question 10

An effective accounting information system:

A)allows employees flexibility in setting the working hours.
B)guarantees a company will not go bankrupt.
C)includes control, compatibility, flexibility, and a favourable cost/benefit relationship.
D)promotes operational efficiency.
E)will prevent fraud in all cases.

Question 11

A good accounting information system includes all of the following features except:

A)compatibility.
B)inflexibility.
C)a favourable cost/benefit relationship.
D)control.

Question 12

Two components that form a computerized accounting system include:

A)hardware and personnel.
B)hardware and software.
C)hardware and input.
D)personnel and input.

Question 13

Define, in a few words, the meaning of internal control.

Question 14

Which of the following is not one of the purposes of internal control?

A)to encourage employees to follow company policy
B)to safeguard the company's assets
C)to ensure accurate, reliable accounting records
D)to guarantee that a business makes a profit

Question 15

Accounting information systems cope with heavy transaction loads by:

A)computerization and specialization.
B)segregation of duties between personnel.
C)hiring temporary personnel.
D)outsourcing the processing of data.

Question 16

A good cost/benefit relationship:

A)offers maximum benefits at a minimum cost.
B)is impossible to achieve.
C)exists in manual accounting systems only.
D)would be ignored in a large organization.

Question 17

Which of the following is true of internal control?

A)A company's outside auditor is responsible for the company's internal control system.
B)One of the major purposes of internal control is to ensure accurate, reliable accounting records.
C)Internal control procedures tend to diminish the importance of operational efficiency.
D)Internal controls are only necessary for large businesses.

Question 18

The two basic components of a computerized accounting information system are the hardware and software.

Question 19

A computerized storehouse of information is known as a(n):

A)network.
B)database.
C)management system.
D)input system.

Question 20

The main computer in a network, where the program and data are stored, is called the:

A)database.
B)hardware.
C)server.
D)software.

Question 21

The final stage of data processing is the:

A)posting of transactions to the accounts.
B)generation of the accounting reports.
C)batch processing of transactions.
D)preparation of the special journals.

Question 22

The system of electronic linkages that allows different computers to share the same information is called a worksheet.

Question 23

An advantage of enterprise resource planning (ERP)systems is the integration of all company activities from purchasing to production to customer service.

Question 24

In a computerized accounting system, a list of options for choosing computer functions is called a(n):

A)menu.
B)server.
C)on-line processor.
D)batch processor.

Question 25

Data from source documents such as sales receipts and bank deposit slips are referred to as outputs of a data processing system.

Question 26

In a manual system, processing includes journalizing transactions, posting the accounts, and preparing the financial statements.

Question 27

Outputs would include:

A)fax orders.
B)sales receipts.
C)bank deposit slips.
D)an income statement.

Question 28

All of the following are advantages of an enterprise resource planning system except:

A)helps companies adjust to changes.
B)expensive to implement.
C)can replace hundreds of separate software systems.
D)can save lots of money.

Question 29

In computerized accounting systems, modules can be the same as submenus.

Question 30

Manual accounting systems are never used in real life.

Question 31

In a computerized accounting system, the posting of journal entries performed on a continuous basis is referred to as:

A)batch processing.
B)on-line processing.
C)quick processing.
D)accuracy processing.

Question 32

Inputs would include:

A)sales receipts.
B)an income statement.
C)a balance sheet.
D)a statement of owner's equity.

Question 33

With a computerized accounting system, the accounting cycle has several additional steps.

Question 34

The three stages of data processing are:

A)inputs, outputs, and processing.
B)source documents, processing, and decision making.
C)processing, reports, and decision making.
D)inputs, decision making, and outputs.

Question 35

Spreadsheets can be linked to computerized accounting packages to help create more complex reports.

Question 36

Computerized accounting systems are organized by:

A)outputs.
B)inputs.
C)function.
D)networks.

Question 37

The set of programs that cause the computer to perform the work desired is called the:

A)hardware.
B)network.
C)server.
D)software.

Question 38

Outputs are the reports used for decision making.

Question 39

In a computerized accounting system, the posting to the general accounts ledger is done automatically.

Question 40

Design of an accounting system begins with the:

A)previous year's financial statements.
B)use of a firewall.
C)chart of accounts.
D)opening trial balance.

Question 41

In a manual accounting system the posting from a sales journal includes daily posting for cash transactions.

Question 42

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

Question 43

Why is a well-structured chart of accounts particularly important in a computerized accounting system?

Question 44

Describe the benefits of a computerized accounting system versus a manual accounting system.

Question 45

Posting the entries from the sales journal to the accounts receivable subsidiary ledger should be done:

A)on a weekly basis.
B)only at the end of the accounting period.
C)on a daily basis.
D)at the end of each month.

Question 46

Transactions must be recorded in either the general journal or a special journal, but not both.

Question 47

Credit postings to the accounts receivable general ledger account come from the cash receipts journal and the general journal.

Question 48

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

Question 49

Transactions in the sales journal are posted both to the general ledger and the accounts payable subsidiary ledger.

Question 50

The general journal is used to record all transactions that do not fit one of the special journals.

Question 51

Both the sales journal and the cash receipts journal require daily posting to the accounts receivable subsidiary ledger and the accounts receivable control account.

Question 52

What are the benefits of studying a manual accounting system given that most companies have computerized accounting systems?

Question 53

The seller would record the return of merchandise sold on account in the sales journal.

Question 54

Customers' individual accounts included in a subsidiary ledger are said to be controlled by the Accounts Receivable account in the:

A)accounts payable ledger.
B)accounts receivable ledger.
C)controlling ledger.
D)general ledger.

Question 55

Special journals save much time in recording repetitive transactions and posting to the ledgers.

Question 56

The general ledger accounts used when posting the sales journal are:

A)cash, sales revenue, accounts receivable, and inventory.
B)sales returns and allowances, sales revenue, accounts receivable, and cost of goods sold.
C)sales revenue, cost of goods sold, inventory, and accounts receivable.
D)sales discounts, sales returns and allowances, sales revenue, and accounts receivable.

Question 57

Accounts receivable in the general ledger is known as a control account.

Question 58

The sum of the account balances in the accounts receivable subsidiary ledger should equal the balance in the accounts receivable account in the general ledger.

Question 59

Cash in the chart of accounts is an example of a control account.

Question 60

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

Question 61

A cash receipts journal would likely contain all of the following columns except:

A)cash debit.
B)sales revenue credit.
C)accounts receivable debit.
D)sales discounts debit.

Question 62

Table 7-6
Provincewide Milling Company uses a sales journal. On June 2, the sales journal appears as you see below.
Sales Journal $\begin{array}{|l|l|l|l|l|r|}\hline& & & &\text { Accts Rec } & \\\text { Date } & \text { Invoice \# } & \text { Customer } & \text { Post } & \text { DR } & \text { COGS DR/ } \\&&&\text { Ref. } & \text { Sales Rev CR } & \text { Inventory CR }\\\hline \text { June 2 } & 909 & \text { Richardson Products } & & \$ 4,200 & \$ 1,090 \\\hline & & & & & \\\hline & & & & & \\\hline & & & & & \\\hline & & \text { Total } & & & \\\hline\end{array}$ Other sales that took place in June are as follows: $$\begin{array} { | c | c | c | c | } \hline \text { Inv \# } & \text { Sales Amount } & \text { Customer } & \text { Cost of Goods Sold } \\\hline 910 & \$ 880 & \text { Anton, Michael } & \$ 390 \\\hline 911 & 1,120 & \text { A1 Repairs } & 560 \\\hline 912 & 500 & \text { Thompson, Al } & 220 \\\hline\end{array}$$

-Refer to Table 7-6, at the end of the month, what entry was made to accounts receivable?

A)credit $6,700
B)debit $6,700
C)debit $4,200
D)credit $2,460

Question 63

The sales journal contains columns for:

A)accounts receivable/sales revenue and supplies/inventory.
B)accounts receivable/sales revenue and inventory/accounts payable.
C)accounts receivable/sales and cost of goods sold/inventory.
D)accounts receivable/inventory and cost of goods sold/accounts payable.

Question 64

Special journals are particularly efficient for:

A)similar, repetitive transactions.
B)unusual transactions.
C)transactions that require recording in 3 or more accounts.
D)transactions that are corrections of previous errors.

Question 65

Which of the following best describes the action known as balancing the ledgers?

A)totaling the subsidiary account balances and cross checking against the main account balance
B)making sure that the ending balance in Sales is equal to the ending balance in Accounts receivable
C)identifying the differences between the cash balance in the ledger and the bank statement
D)totaling the expense account balances and cross checking against total expenses shown on the income statement

Question 66

The accounts receivable credit column of the cash receipts journal is:

A)posted in summary only at the end of the month.
B)posted by individual amounts only at the end of the month.
C)not posted.
D)posted in summary at the end of the month and by individual amounts on a daily basis

Question 67

Parker Industrial Corp. uses a sales journal to record each sale transaction. At the end of January, the sales journal was as you see below: Sales Journal $\begin{array}{|r|r|l|l|r|r|}\hline& & & &\text { Accts Rec } & \\\text { Date } & \text { Invoice \# } & \text { Customer } & \text { Post } & \text { DR } & \text { COGS DR/ } \\&&&\text { Ref. } & \text { Sales Rev CR } & \text { Inventory CR }\\\hline \text { Jan 12 } & 3077 & \text { Fogelin, A. } & & \$ 2,400 & \$ 960 \\\hline 19 & 3078 & \text { Faass Products Co. } & & 1,012 & 800 \\\hline 24 & 3079 & \text { Lanier Service Inc. } & & 444 & 201 \\\hline 29 & 3080 & \text { June, L. } & & 709 & 366 \\\hline 31 & & \text { Total } & & \$ 4,565 & \$ 2,327 \\\hline\end{array}$ When the sales journal is posted to the general ledger, which entries are made?

A)debit Accounts Receivable $4,565; credit Inventory $2,327 debit Sales Revenue $4,565; credit COGS $2,327
B)debit Sales Revenue $4,565; credit Accounts Receivable $4,565 debit Inventory $2,327; credit COGS $2,327
C)debit Accounts Receivable $4,565; credit Sales Revenue $4,565 debit COGS $2,327; credit Inventory $2,327
D)debit Accounts Receivable $2,327; credit Inventory $2,327 debit COGS $4,565; credit Inventory $4,565

Question 68

Lee Enterprises received payment within the discount period from a customer who had purchased merchandise on account. The sales invoice was for $2,000, and credit terms were 3/15 n/30. In the cash receipts journal, $1,940 will appear under the:

A)sales revenue credit column.
B)accounts receivable credit column.
C)cash debit column.
D)cash credit column.

Question 69

Table 7-6
Provincewide Milling Company uses a sales journal. On June 2, the sales journal appears as you see below.
Sales Journal $\begin{array}{|l|l|l|l|l|r|}\hline& & & &\text { Accts Rec } & \\\text { Date } & \text { Invoice \# } & \text { Customer } & \text { Post } & \text { DR } & \text { COGS DR/ } \\&&&\text { Ref. } & \text { Sales Rev CR } & \text { Inventory CR }\\\hline \text { June 2 } & 909 & \text { Richardson Products } & & \$ 4,200 & \$ 1,090 \\\hline & & & & & \\\hline & & & & & \\\hline & & & & & \\\hline & & \text { Total } & & & \\\hline\end{array}$ Other sales that took place in June are as follows: $$\begin{array} { | c | c | c | c | } \hline \text { Inv \# } & \text { Sales Amount } & \text { Customer } & \text { Cost of Goods Sold } \\\hline 910 & \$ 880 & \text { Anton, Michael } & \$ 390 \\\hline 911 & 1,120 & \text { A1 Repairs } & 560 \\\hline 912 & 500 & \text { Thompson, Al } & 220 \\\hline\end{array}$$

-Refer to Table 7-6, at the end of the month, what entry was made to inventory?

A)credit $2,260
B)debit $2,260
C)debit $6,700
D)credit $6,700

Question 70

The end-of-month balance in Dryer Company's cash receipts journal cash column is $22,630. How will this column be posted?

A)The total will be posted to the cash account as a credit.
B)The total will be posted to the cash account as a debit.
C)The individual amounts are posted on a daily basis.
D)The total is not posted.

Question 71

Assuming the use of special journals, the sale of merchandise to Landon Browning for cash would be recorded in the:

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

Question 72

The sales journal is used for the sale of:

A)merchandise for cash.
B)merchandise on account.
C)assets other than merchandise for cash.
D)assets other than merchandise on account.

Question 73

Assuming the use of special journals, the sale of merchandise to Jerri Blackwell on account would be recorded in the:

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

Question 74

Every subsidiary ledger must have its own:

A)control account.
B)subsidiary account.
C)general account.
D)general ledger.

Question 75

Rockhill Industries received payment after the expiration of the discount period from a customer who had purchased merchandise on account. The sales invoice was for $3,000, and credit terms were 3/15 n/30. The cost of the merchandise was $1,800. In the cash receipts journal:

A)$3,000 will appear in the sales revenue credit column.
B)$3,000 will appear in the accounts receivable debit column.
C)$3,000 will appear in the accounts receivable credit column.
D)$90 will appear in the sales discounts debit column.

Question 76

Clooney Enterprises received a tax refund cheque in the mail and immediately deposited it in the bank. Assuming the use of special journals, this entry would be recorded in the:

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

Question 77

Gere Company returned defective supplies to a supplier and received a cash refund. Assuming the use of special journals, this entry would be recorded in the:

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

Question 78

Assuming the use of special journals, the borrowing of $80,000 from the bank by signing a note payable would be recorded in the:

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

Question 79

On April 10, Salt Company received a cheque from Pepper Company for payment of an invoice dated March 24 for $2,000 with credit terms of 2/10 n/30. On March 28, Pepper had returned $200 of the merchandise because it was defective. How would this transaction be recorded in Salt's cash receipts journal?

A)debit Cash $2,000; credit Accounts Receivable-Pepper Company $2,000
B)debit Cash $1,800; credit Accounts Receivable-Pepper Company $1,800
C)debit Cash $1,764; credit Accounts Receivable-Pepper Company $1,764
D)debit Cash $1,764 and Sales Discounts $36; credit Accounts Receivable-Pepper Company $1,800

Question 80

Assuming the use of special journals, the sale of equipment for cash would be recorded in the:

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