Copyright © 2007 Prentice-Hall. All rights reserved 1 Accounting Information Systems Chapter 7

Copyright © 2007 Prentice-Hall. All rights reserved 2 A good cost/benefit relationship designing an accounting system means that 1.The cost of an accounting system should not outweigh the benefits received from it 2.The new system should be cheaper than the system it is replacing. 3.The benefits received from an accounting system should not outweigh the cost 4.None of the above

Copyright © 2007 Prentice-Hall. All rights reserved 3 Answer: 1

Copyright © 2007 Prentice-Hall. All rights reserved 4 Which of the following is not necessarily a feature of an efficient accounting system 1.Flexibility 2.Computerized 3.Compatibility 4.Control

Copyright © 2007 Prentice-Hall. All rights reserved 5 Answer: 2

Copyright © 2007 Prentice-Hall. All rights reserved 6 What formula would be entered in cell C6 to compute gross profit? 1.=SUM(C4:C5) 2.=C4+C5 3.=C4-C5 4.=C4/C5

Copyright © 2007 Prentice-Hall. All rights reserved 7 Answer: 3 C4-C5. This computes Sales – Cost of goods sold

Copyright © 2007 Prentice-Hall. All rights reserved 8 A cash sale is recorded in the 1.Sales journal 2.Cash receipts journal 3.Purchases journal 4.Cash payments journal 5.General journal

Copyright © 2007 Prentice-Hall. All rights reserved 9 Answer: 2 (All cash receipts are recorded in the cash journal. Only sales on account are recorded in the sales journal

Copyright © 2007 Prentice-Hall. All rights reserved 10 Purchases of inventory on account is recorded in the 1.Sales journal 2.Cash receipts journal 3.Purchases journal 4.Cash payments journal 5.General journal

Copyright © 2007 Prentice-Hall. All rights reserved 11 Answer: 3 The purchases journal is used to debit inventory or purchases and credit accounts payable.

Copyright © 2007 Prentice-Hall. All rights reserved 12 When a customer returns merchandise for credit, the transaction is recorded in the 1.Sales journal 2.Cash receipts journal 3.Purchases journal 4.Cash payments journal 5.General journal

Copyright © 2007 Prentice-Hall. All rights reserved 13 Answer: 5 When a transaction does not fit into a special journal, it is entered into the general journal.

Copyright © 2007 Prentice-Hall. All rights reserved 14 When a check is prepared to pay on an account payable, which journal is used? 1.Sales journal 2.Cash receipts journal 3.Purchases journal 4.Cash payments journal 5.General journal

Copyright © 2007 Prentice-Hall. All rights reserved 15 Answer: 4 The cash payments is used to record all cash payments.

Copyright © 2007 Prentice-Hall. All rights reserved 16 Postings to the subsidiary accounts are made 1.Annually 2.Monthly 3.Weekly 4.Daily

Copyright © 2007 Prentice-Hall. All rights reserved 17 Answer: 4 When subsidiary accounts receivable are posted daily, the company is aware of how much each individual customers owes.

Copyright © 2007 Prentice-Hall. All rights reserved 18 The balance of accounts receivable control account in the general ledger 1.Must equal the amount of total sales 2.Must be equal to the total of all the individual balances in the accounts receivable subsidiary ledger 3.Must be equal to the total of all the individual balances in the cash subsidiary ledger 4.Must always be zero

Copyright © 2007 Prentice-Hall. All rights reserved 19 Answer: 2 The subsidiary accounts are the detail associated with the totals in the control accounts.

Copyright © 2007 Prentice-Hall. All rights reserved 20 For which of following would a company be least likely to use a subsidiary ledger. 1.Inventory 2.Owner's capital 3.Accounts payable 4.Accounts receivable

Copyright © 2007 Prentice-Hall. All rights reserved 21 Answer: 2 Subsidiary accounts are used to track details associated with the control account. A company might have many different inventory items, many customers, and many suppliers.

Copyright © 2007 Prentice-Hall. All rights reserved 22 If a transaction cannot be recorded in a special journal 1.The company can ignore it based on the materiality principle 2.It is recorded as an adjustment on the work sheet 3.It is entered in the cash receipts journal since most transactions affect cash 4.It is recorded in the general journal

Copyright © 2007 Prentice-Hall. All rights reserved 23 Answer: 4

Copyright © 2007 Prentice-Hall. All rights reserved 24 Which of the following is a benefit to using special journals to record transactions? 1.They can save time in the posting process 2.They save time because fewer transactions need to be recorded 3.They provide more information than the use of the general journal alone 4.They are required by GAAP

Copyright © 2007 Prentice-Hall. All rights reserved 25 Answer: 1

Copyright © 2007 Prentice-Hall. All rights reserved 26