Deck 27 Appendix : Accounting With Special Journals

Question 1

With on-line systems, all information storage should be off-line to protect the data.

Answer 1

False

Question 2

The general journal is used for transactions not covered by special journals and for regular, adjusting, closing and correcting entries.

Answer 2

True

Question 3

A sales journal is used to record cash sales.

Answer 3

False

Question 4

A special journal is used to record and post transactions of a similar type.

Question 5

Internal controls include policies to direct operations toward common goals, procedures to ensure reliable financial reports, safeguards to protect company assets and methods to achieve compliance with laws and regulations.

Question 6

The cost-benefit principle affects all other accounting system principles.

Question 7

Input devices are the means to make accounting information available to users.

Question 8

Accounting information systems are so accurate that decision makers in practice do not need a basic knowledge of how the systems work.

Question 9

Auditors rely on accounting system databases when they audit financial statements and a company's controls.

Question 10

Accurate source documents are crucial to accounting systems to limit the possibility of entering faulty data into the system.

Question 11

Accounting information systems are designed to capture information about a company's transactions and events and to provide output including financial, managerial and tax reports.

Question 12

Accounting information processes are structured to eliminate the need for professional judgment.

Question 13

Due to electronic files and Web communications, source documents are no longer required.

Question 14

The five basic principles of accounting information systems are control, competency, compatibility, flexibility and cost-benefit.

Question 15

The compatibility principle requires that an accounting system report useful, understandable, timely and pertinent information for effective decision making.

Question 16

Input devices include journal entries, keyboards, scanners and modems.

Question 17

The purchases journal is used to record cash purchases of merchandise.

Question 18

With advanced technology there is no need to trace information that has been entered into an accounting information system to its source.

Question 19

The flexibility principle requires that an accounting information system conform with a company's activities, personnel and structure and adapt to a company's unique characteristics.

Question 20

Accounting information systems collect and process data from transactions and events, organize them in useful forms and communicate results to decision makers.

Question 21

Most companies use batch processing instead of online because batch processing requires continual updating of databases.

Question 22

A subsidiary ledger is a listing of individual accounts with a common characteristic.

Question 23

Computer networks are links among computers giving different users and different computers access to common databases and programs.

Question 24

Subsidiary ledgers are not needed in perpetual inventory systems because the accounting system captures sufficient details to support analyses that decision makers need.

Question 25

Under the perpetual inventory system, special journals are not required.

Question 26

Most transactions for merchandising businesses fall into four groups: sales on credit, purchases on credit, cash receipts and cash disbursements.

Question 27

The SAP enterprise-resource planning software is already being used to help direct the operations of many of the world's largest companies.

Question 28

A business segment is a part of a company that is separately identified by its products or services or by the geographic market it serves.

Question 29

Special journals are designed in a manner that is best suited for each business, so good systems design for a business could include collapsing the sales and cash receipts journal into one journal.

Question 30

Equipment, inventory and investments can each include its own subsidiary ledger.

Question 31

Off-the-shelf accounting software is not adequate to meet the needs of small businesses.

Question 32

The accounts payable ledger has a controlling account in the general ledger and a separate subsidiary account for each creditor in the accounts payable ledger.

Question 33

An advantage of online processing is up-to-date databases.

Question 34

Enterprise resource planning software is primarily used for recording journal entries.

Question 35

Segment return on assets is segment operating income divided by segment average assets.

Question 36

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 37

When posting from special journals each debit and credit entry is entered as a separate amount.

Question 38

External users of financial statements are generally uninterested in segment information to understand a company's business activities.

Question 39

The accounts payable ledger is used for storing transactions data regarding individual customers.

Question 40

Enterprise resource planning software packages include the programs that manage a company's vital operations.

Question 41

A columnar journal is any journal with only one column.

Question 42

Effective accounting information systems will do all of the following except:

A) Collect and process data from transactions and events.
B) Organize data in useful forms.
C) Communicate information to business decision makers.
D) Are crucial to effective decision-making.
E) Eliminate all errors.

Question 43

Posting debits from the Sales journal to Accounts Receivable twice - once to the general ledger account Accounts Receivable and once to the customer's subsidiary account - violates the accounting equation of debits equal credits.

Question 44

Internal control procedures do not include:

A) Procedures to ensure reliable financial reports.
B) Safeguards to protect company assets.
C) Methods to achieve compliance with laws and regulation.
D) Procedures to guarantee against fraud.
E) Policies to direct operations toward common goals.

Question 45

If the total balance of the accounts receivable ledger equals the total of the controlling Accounts Receivable account, then the accounts are presumed to be correct.

Question 46

The control principle for accounting information systems requires that the:

A) Benefits from an activity outweigh the costs of the activity
B) System report useful, understandable, timely and pertinent information for effective decision making
C) System aid managers in controlling and monitoring business activities
D) System adapt to changes in the company, business environment and needs of decision makers
E) System conform with a company's activities, personnel and structure

Question 47

The accounting principle that requires an accounting information system to report useful, understandable, timely and pertinent information for effective decision-making is the:

A) Control principle
B) Compatibility principle
C) Relevance principle
D) Flexibility principle
E) Cost-Benefit principle

Question 48

A procedure called direct posting of sales invoices can substitute for the special sales journal.

Question 49

The difference in the sales journal between the perpetual and periodic inventory systems is that a column is used to record cost of goods sold and inventory amounts for each sale under the perpetual system but not the periodic system.

Question 50

The flexibility principle of accounting information systems requires that the:

A) Benefits from an activity outweigh the costs of the activity
B) System report useful, understandable, timely and pertinent information for effective decision making
C) System aid managers in controlling and monitoring business activities
D) System adapt to changes in the company, business environment and needs of decision makers
E) System conform with a company's activities, personnel and structure

Question 51

The five fundamental principles of accounting information systems are:

A) Control, accountability, relevance, compatibility and flexibility
B) Control, relevance, compatibility, flexibility and cost-benefit
C) Control, relevance, compatibility, flexibility and safety
D) Control, relevance, compatibility, timeliness and cost-benefit
E) Historical cost, relevance, compatibility, flexibility and cost-benefit

Question 52

The purchases journal is identical under both the periodic and the perpetual inventory systems.

Question 53

Each transaction recorded in the sales journal yields a debit to Accounts Receivable and a credit to Sales.

Question 54

Account balances in the general ledger and the subsidiary ledgers should be proved for accuracy after posting is complete.

Question 55

To check for accuracy after posting: first a trial balance is completed, then, the subsidiary ledgers are tested by preparing a schedule of the controlling account.

Question 56

A company using the periodic inventory system does not record the increase in cost of goods sold and decrease in inventory at the time of each sale in the sales journal.

Question 57

Individual transactions in the sales journal are regularly posted to customer accounts in the accounts payable ledger.

Question 58

A schedule of accounts receivable is a listing of all creditor accounts and account balances.

Question 59

Segment information is often useful to investors for evaluating a company's profitability, risk and growth.

Question 60

Three transactions that would be recorded in the sales journal are: (1) recording sales taxes (2) recording sales returns and allowances and (3) recording purchases discounts.

Question 61

The accounts receivable ledger:

A) Is for recording credit sales
B) Is for storing transactions data for individual customers
C) Is for storing transactions data for individual creditors
D) Is for recording cash receipts from customers
E) Is also the controlling account

Question 62

The sales journal is used for recording:

A) Credit purchases
B) Credit sales
C) Cash sales
D) Cash purchases
E) Cash receipts

Question 63

A subsidiary ledger that contains a separate account for each supplier (creditor) to the company is a(n):

A) Controlling account
B) Accounts receivable ledger
C) Accounts payable ledger
D) General ledger
E) Special journal

Question 64

Information storage:

A) Eliminates the need for professional judgment
B) Keeps data in a form accessible to information processors
C) Provides the basic information processed by an accounting system
D) Captures information from source documents
E) Is always in electronic format

Question 65

Input devices include:

A) Bar-code readers.
B) Printers.
C) Software.
D) Ledgers.
E) Database files.

Question 66

Subsidiary ledgers provide all the following benefits except:

A) Remove excessive detail from the general ledger.
B) Provide up-to-date information on customer or other specific account balances.
C) Aid in error identification for individual accounts.
D) Help with division of labor (recordkeeping tasks).
E) Allow users to record any transactions.

Question 67

A book of original entry that is used to record and post transactions of a similar type is a:

A) Schedule
B) Columnar ledger
C) Special journal
D) General journal
E) Subsidiary ledger

Question 68

An accounts payable ledger is:

A) A subsidiary ledger that contains an account for each supplier (creditor)
B) A list of the balances of all the accounts in the accounts receivable ledger that is added to show the total amount of accounts receivable outstanding
C) A book of original entry that is designed and used for recording only a specific type of transaction
D) The ledger that contains the financial statement accounts of a business
E) A subsidiary ledger that contains a separate account for each party that grants both short-term and long-term credit on account to the company

Question 69

The purchases journal is used for recording:

A) Credit purchases
B) Credit sales
C) Cash sales
D) Cash purchases
E) Cash disbursements

Question 70

The basic components of an accounting information system include all but which of the following?

A) Source documents.
B) Input devices.
C) Cell phones.
D) Information processors.
E) Information storage.

Question 71

The ledger that contains the financial statement accounts of a company is the:

A) General ledger
B) General journal
C) Special ledger
D) Special journal
E) Column balance ledger

Question 72

A subsidiary ledger:

A) Includes transactions not covered by special journals
B) Is a listing of all of the accounts of a business
C) Is a listing of individual accounts with a common characteristic
D) Is also called a general ledger
E) Is also called a special journal

Question 73

Output devices include all of the following except:

A) Printers
B) Monitors
C) LCD projectors
D) Web communications
E) the general journals

Question 74

Source documents:

A) Are input devices
B) Provide the basic information processed by an accounting system
C) Cannot be electronic files
D) Store processed information for future use
E) Provide systems that interpret, transform and summarize data

Question 75

When a company uses special journals, the general journal is used for selected transactions and events including:

A) Recording adjusting transactions
B) Posting transactions to special journals
C) Accumulating debits and credits
D) Collecting detailed listings of amounts
E) Recording cash receipts

Question 76

An accounts receivable ledger is:

A) A subsidiary ledger that contains an account for each credit customer
B) A list of the balances of selected accounts in the accounts receivable ledger that is added to show the total amount of the significant accounts receivable outstanding
C) A book of original entry that is designed and used for recording only a specified type of transaction
D) The ledger that contains the financial statement accounts of a business
E) A subsidiary ledger that contains a separate account for each creditor (supplier) to the company

Question 77

Assume that a company uses a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal and a general journal. A sales return for credit on account would be recorded in the:

A) Sales journal
B) General journal
C) Cash receipts journal
D) Accounts receivable ledger
E) Cash disbursements journal

Question 78

Information processors:

A) Include information storage
B) Interpret, transform and summarize information for use in analysis and reporting
C) Are components of an accounting system that keep data in accessible form
D) Are the means to take information out of an accounting system and make it available to users
E) Include scanners

Question 79

The use of an Accounts Payable controlling account:

A) Reduces the number of accounts in the subsidiary ledger
B) Reduces the total number of accounts maintained
C) Reduces the number of entries in the general journals
D) Reduces the number of accounts in the general ledger
E) Increases the number of columns in the journals

Question 80

The special journals of many accounting systems include all the following except:

A) Sales journal
B) The general ledger
C) Purchases journal
D) Cash receipts journal
E) Cash disbursements journal