Deck 7: Accounting Information Systems

Question 1

Match each term to its definition.

A) Can accommodate changes in the business over time.
B) Provides information that will improve decision making and reduce uncertainty.
C) Benefits received outweigh the cost of the system.
D) Works smoothly with the business's employees and organization structure.
E) Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Control

Answer 1

E

Question 2

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

Answer 2

True

Question 3

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

Answer 3

C

Question 4

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 5

Match each term to its definition.

A) Can accommodate changes in the business over time.
B) Provides information that will improve decision making and reduce uncertainty.
C) Benefits received outweigh the cost of the system.
D) Works smoothly with the business's employees and organization structure.
E) Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Flexibility

Question 6

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

Question 7

List and describe two features of an effective accounting information system.

Question 8

Match each term to its definition.

A) Can accommodate changes in the business over time.
B) Provides information that will improve decision making and reduce uncertainty.
C) Benefits received outweigh the cost of the system.
D) Works smoothly with the business's employees and organization structure.
E) Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Positive cost/benefit relationship

Question 9

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

Question 10

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

Question 11

Match each term to its definition.

A) Can accommodate changes in the business over time.
B) Provides information that will improve decision making and reduce uncertainty.
C) Benefits received outweigh the cost of the system.
D) Works smoothly with the business's employees and organization structure.
E) Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Compatibility

Question 12

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 13

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 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

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 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

Match each term to its definition.

A) Can accommodate changes in the business over time.
B) Provides information that will improve decision making and reduce uncertainty.
C) Benefits received outweigh the cost of the system.
D) Works smoothly with the business's employees and organization structure.
E) Provides safeguards for a business's assets and reduces the likelihood of fraud and errors.
Relevance

Question 18

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 19

For each of the following business transactions,list two examples of related accounting information system (AIS)activities:
$$\begin{array} { | l | l | } \hline \text { Business Transactions } & \text { Accounting Information System Activities } \\\hline \text { Sellmerchandise } & \\\text { inventory } & \\\hline \text { Purchase of goods or } & \\\text { services } & \\\hline \text { Payroll } & \\\hline\end{array}$$

Question 20

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

Question 21

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 22

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 23

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

Question 24

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

Question 25

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

Question 26

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 27

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

Question 28

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

A) are not needed if a computerized system is used
B) detail the strategic planning of the business
C) have complete information about the financial statements
D) provide the evidence and data for accounting transactions

Question 29

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

Question 30

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

Question 31

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

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 are spending increasingly large amounts of cash to ensure that their data and information are secure.

Question 33

Which of the following is NOT an example of a storage device in an accounting information system?

A) computer
B) financial statements
C) filing cabinet
D) server

Question 34

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 35

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

Question 36

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

Question 37

A computerized system uses software to process transactions.Thus employees are no longer required to manually journalize and post transactions to the accounts.

Question 38

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

Question 39

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

A) accounting information system
B) RAM
C) server
D) router

Question 40

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

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

Question 41

Depreciation expense is recorded in a ________.

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

Question 42

Generally,all transactions are recorded in both a special journal and the general journal.

Question 43

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 cannot be formatted.
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 44

Most small businesses have computerized all of their accounting.

Question 45

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 46

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 47

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

Question 48

A special journal is ________.

A) an accounting journal designed to record one 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 49

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 50

Cash sales are recorded in the ________ journal.

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

Question 51

The purchase of three computers for the sales staff,on account,is recorded in the ________ journal.

A) general
B) purchases
C) cash payments
D) equipment

Question 52

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

A) In a manual system, reports and financial statements can be created using Word documents, Excel spreadsheets, or PowerPoint.
B) In a computerized system, the software can generate reports instantaneously that cannot be formatted.
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 53

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

Question 54

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 55

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

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

Question 56

The accounting is the same regardless of whether a business uses a manual or a computerized accounting information system.

Question 57

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 58

Adjusting entries are recorded in the ________.

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

Question 59

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 60

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 61

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 62

Triangle Company sold a product on credit for $2,235 to Hexagon Sales.The cost of goods sold was $1,324.Assuming Triangle 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 63

Southeastern Company sold merchandise for $4,450 to Northern Company on account.The cost of goods sold was $1,185.Southeastern Company 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 64

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

Question 65

Gold Company had the following transactions:
Use the following sales journal to record the preceding transactions.The company uses the perpetual inventory system.

Question 66

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 67

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 68

A company has four vendors and the accounts payable subsidiary ledger shows the following balances. $$\begin{array} { | l | r | } \hline \text { Alpha } & \$ 278,821 \\\hline \text { Beta } & 150,474 \\\hline \text { Gamma } & 91,943 \\\hline \text { Delta } & 41,187 \\\hline\end{array}$$ Calculate the accounts payable balance in the general ledger.

A) $429,295
B) $562,425
C) $278,821
D) $283,604

Question 69

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

Question 70

Ocean Company sells a product for $500 on account to Great Atlantic Sales.This transaction will be recorded in the ________.

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

Question 71

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 72

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

Question 73

California Company sold a product for $7,150 to Alliance Enterprises 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 74

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 75

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 76

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

Question 77

Sales on account are recorded in a cash receipts journal.

Question 78

Dakota Company has four customers: A,B,C,and D.The accounts receivable balance in the general ledger is $9,083 and the accounts receivable subsidiary ledger of customers A,C,and D have $1,746,$3,296,and $3,940,respectively.Calculate the amount in the accounts receivable subsidiary ledger account of customer B.

A) $8,982
B) $1,847
C) $1,291
D) $101

Question 79

Northern Company sold goods to Eastern Enterprises for $1,000 on account.Cost of goods sold was $745.Northern 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 80

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