Deck 7: Accounting Information Systems

Question 1

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

Answer 1

False

Question 2

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

Answer 2

False

Question 3

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

Answer 3

False

Question 4

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

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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 12

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

Question 13

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

Question 14

A sales journal is used to record cash sales.

Question 15

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

Question 16

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

Question 17

The cost-benefit principle prescribes that the benefits from an activity in an accounting information system outweigh the costs of that activity.

Question 18

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

Question 19

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

Question 20

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 21

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

Question 22

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 23

Equipment, inventory, and investments are other accounts that can include detailed information in a subsidiary ledger.

Question 24

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 25

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

Question 26

Special journals allow an efficient division of labor, which is also an effective control procedure.

Question 27

Two common subsidiary ledgers are cash receipts and cash disbursements.

Question 28

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

Question 29

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

Question 30

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

Question 31

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

Question 32

Most companies use batch processing instead of online processing because batch processing immediately updates databases.

Question 33

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

Question 34

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

Question 35

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

Question 36

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

Question 37

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

Question 38

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

Question 39

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

Question 40

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 41

All of the following statements regarding accounting information systems are except:

A) Accounting information systems collect and process data from transactions and events.
B) Accounting information systems organize data in useful forms.
C) Accounting information systems do not establish internal control procedures.
D) Accounting information systems are crucial to effective decision making.
E) Accounting information systems communicate information to business decision makers.

Question 42

The flexibility principle of accounting information systems prescribes 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 be able to adapt to changes in the company, business environment, and needs of decision makers.
E) System conforms to a company's activities, personnel, and structure.

Question 43

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 must have internal controls.
D) System adapts to changes in the company, business environment, and needs of decision makers.
E) System conforms to a company's activities, personnel, and structure.

Question 44

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 45

A columnar journal is any journal with only one column.

Question 46

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 47

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

Question 48

The five fundamental principles of accounting information systems are:

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

Question 49

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

Question 50

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 51

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 52

All of the following statements regarding internal control procedures are except:

A) Internal control procedures are designed to ensure reliable financial reports.
B) Internal control procedures are designed to safeguards company assets.
C) Internal control procedures direct operations toward common goals.
D) Internal control procedures include methods to achieve compliance with laws and regulation.
E) Internal control procedures are bit affected by the cost-benefit principle.

Question 53

The accounting principle that prescribes 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 54

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

Question 55

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

Question 56

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

Question 57

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

Question 58

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 59

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

Question 60

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 61

Subsidiary ledgers do all of the following 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) Eliminate the need for individual postings to the customer or supplier accounts.

Question 62

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) Cannot be online.

Question 63

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 64

Output devices include all of the following except:

A) Printers.
B) Monitors.
C) LCD projectors.
D) Web communications.
E) Bar code readers.

Question 65

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) Cannot be paper documents.

Question 66

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 67

A record that contains all accounts (with amounts) of a company is the:

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

Question 68

All of the following statements regarding accounting information systems are except:

A) Accounting information systems consist of people, records, methods, and equipment.
B) Accounting information systems have the same goals and share basic components.
C) Accounting information systems are less important than ever to decision makers.
D) Accounting information systems are designed to provide output including financial, managerial, and tax reports.
E) Accounting information systems are designed to capture information about a company's transactions.

Question 69

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 and amounts with a common characteristic.
D) Is also called a general ledger.
E) Is also called a special journal.

Question 70

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 71

Input devices include:

A) Bar-code readers.
B) Printers.
C) Software.
D) Ledgers.
E) Information processors.

Question 72

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 73

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 74

The special journals of many accounting systems include the:

A) Sales journal.
B) Purchases journal.
C) Cash receipts journal.
D) Cash disbursements journal.
E) General Ledger.

Question 75

A log 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 76

The sales journal is used for recording:

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

Question 77

The basic components of an accounting information system include all of the following except:

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

Question 78

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 79

The purchases journal is used for recording:

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

Question 80

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.