Deck 7: Accounting Information Systems

Question 1

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)can accommodate changes in the business over time.

Answer 1

A

Question 2

Both small and large companies require a big accounting information system. Therefore, the cost of employing an accounting information system is same for both.

Answer 2

False

Question 3

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

Answer 3

True

Question 4

The collection of time records is an Accounting Information System activity that is classified as a business transaction that involves the sale of merchandise inventory.

Question 5

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 6

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

Question 7

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

Question 8

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

Question 9

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

A)preparation and payment of payroll
B)processing of sales invoice
C)receipt of goods or services
D)payment for goods or services

Question 10

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

Question 11

A computerized system uses software to process transactions and it allows businesses to process transactions without actually requiring employees to journalize and post to the accounts.

Question 12

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

Question 13

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

Question 14

Which of the following accounting information system activities can be classified under payroll business transactions?

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

Question 15

One of the advantages of a computerized accounting information system, as compared to a manual one, is that it does not cost to ensure that the firm's data and information are secure.

Question 16

For a company 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 17

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)can accommodate changes in the business over time.

Question 18

An effective accounting information system with adequate internal controls can safeguard a business's assets and reduce the likelihood of fraud and errors.

Question 19

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

Question 20

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

Question 21

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 22

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 23

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 24

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

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

Question 25

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

Question 26

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 are audited and error-free, it provides the evidence and data for accounting transactions.

Question 27

An effective accounting information system that provides relevant information:

A)will increase the likelihood of fraud and errors.
B)reduces the cost of employing an accounting information system.
C)improves decision making and reduces uncertainty.
D)should be manual to improve the accuracy of data entry.

Question 28

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 29

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)can accommodate changes in the business over time.

Question 30

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

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

Question 31

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

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 manual and computerized 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 an accounting information system, source documents are the documents which:

A)are audited and presented to the Securities 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 34

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 35

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 that 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 36

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 37

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)can accommodate changes in the business over time.

Question 38

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 39

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 40

Sales on account are recorded in a cash receipts journal.

Question 41

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

Question 42

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 43

Centi Corporation sold goods to John for $1,000 on credit. Cost of goods sold was $745. Assuming that the firm is following a perpetual inventory system and using a sales journal, it will record $745 in the:

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

Question 44

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

Question 45

Assume that a company has only four customers: A, B, C, and D. The accounts receivable balance in the general ledger is $7,983 and the accounts receivable subsidiary ledger of customers A, C, and D have $1,246, $2,596 and $3,240 respectively. Calculate the amount in the accounts receivable subsidiary ledger account of customer B.

A)$7,082
B)$2,147
C)$1,391
D)$901

Question 46

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 47

Adjusting entries are recorded in the ________.

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

Question 48

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 49

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 50

While recording a transaction 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 51

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 52

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 than the accounts receivable subsidiary ledger.

Question 53

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

Question 54

Which of the following is true of a control account?

A)It is a valuation account from which balances are added to another account.
B)Its balance equals the sum of the balances in a group of related accounts in a subsidiary ledger.
C)It is equivalent to a contra account and represents the offsetting nature of debits and credits on a firm's financial statements.
D)It holds individual accounts that support a general ledger account.

Question 55

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)$419,295
B)$532,425
C)$275,821
D)$256,604

Question 56

Which of the following is true of a sales journal?

A)It is a special journal used to record all the cash sales.
B)It is used to record the sales of capital assets, such as buildings.
C)It is a special journal used to record credit sales.
D)It is a general journal that is used to record the adjustments in revenue account.

Question 57

A subsidiary ledger is:

A)an accounting journal designed to record a specific type of transaction.
B)a created list of the 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 58

While posting the entries from a sales journal, the total of the Accounts Receivable DR, Sales Revenue CR column is posted to the accounts receivable subsidiary ledger.

Question 59

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

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

Question 60

The credit sales of assets that occur infrequently, such as buildings, are recorded in the:

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

Question 61

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 equity decreases.
D)merchandise inventory decreases and equity decreases.

Question 62

If a business uses the periodic inventory system, the sales journal:

A)will record both the cash and credit sales.
B)will include a Purchase DR and Account Receivable CR column.
C)will exclude the Accounts Receivable DR and Sales Revenue CR column.
D)will not include the Cost of Goods Sold DR and Merchandise Inventory CR column.

Question 63

When a sales journal is posted to the general ledger at the end of the month, the accountant totals the Accounts Receivable DR, Sales Revenue CR and Cost of Goods Sold DR, Merchandise Inventory CR columns. This process is commonly called:

A)scalping.
B)ticking.
C)footing.
D)framing.

Question 64

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

Question 65

Tangent Corporation makes a $1,200 purchase of merchandise inventory on account. This transaction will be recorded in the:

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

Question 66

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)Though the sales journal is posted monthly to the subsidiary ledger, it is a reliable record of the amount receivable 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 67

Multi Corporation sold merchandise for $4,450 to Susan on credit. The cost of goods sold was $1,185. Assuming that the firm is following a perpetual inventory system, it will record $4,450 in the:

A)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 68

Hexa Corporation sold a product on credit for $2,235 to Merin. The cost of goods sold was $1,324. Assuming that 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 69

Deal Corporation sells a product for $500 cash to Liza. This transaction will be recorded in the:

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

Question 70

A CR.5 posting reference in a subsidiary ledger indicates that:

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

Question 71

The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Question 72

Which of the following is not included in a typical cash receipts journal of a business using 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 73

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 are also entered in the general journal.
D)It cannot be used with a perpetual inventory system.

Question 74

Which of the following is true of a cash receipts journal?

A)In a cash receipts journal, cash sales are recorded in the Accounts Receivable CR column and the Cash DR column.
B)In a cash receipts journal, collections on account are recorded in the Accounts Receivable DR column and the Cash DR column.
C)It ignores the miscellaneous cash receipt transactions.
D)In a cash receipts journal, the sales for cash will have entries in the Sales Revenue CR column.

Question 75

Tangent Corporation makes a $1,200 purchase of merchandise inventory for cash. This transaction will be recorded in the:

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

Question 76

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

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

Question 77

Every transaction recorded in the cash receipt journal includes a:

A)credit to cash.
B)debit to accounts receivable.
C)credit to accounts receivable.
D)debit to cash.

Question 78

Tangent Corporation sold a product for $7,150 to Michael on credit. The cost of goods sold is $5,650.Assuming that 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 79

Cash purchases are recorded in the purchases journal.

Question 80

Depreciation of fixed assets is recorded in a:

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