Test bank accounting 25th editon warren chapter 5 accounting systems

Chapter Accounting Systems Student: _ Businesses must implement controls to help guide the behavior of their employees toward business objectives True False The methods or procedures used to record and report financial data are called the accounting system True False Systems analysis is the final phase in the creation or revision of an accounting system True False Processing methods are the means by which the system collects, summarizes, and reports accounting information True False Accounting systems evolve through a three-step process: analysis, design and feedback True False An accounting system is the methods and procedures used to collect, classify, summarize, and report the businesses financial information True False Most accounting systems evolve as the business grows and requires changes in their methods for collecting, accumulating, and reporting information True False Once an accounting system has been implemented, feedback will be used to continuously analyze and improve the system True False Analysis of user needs is the final phase in the creation or revision of an accounting system True False 10 When specialized journals are used, the general journal is not necessary True False 11 Specialized journals are books of original entry True False 12 Transactions must first be recorded into the general journal before they can be entered into specialized journals True False 13 The format and number of specialized journals that a business uses depends upon the legal organization of the business True False 14 The basic procedure of posting from a revenue journal is to make all postings at the end of the month True False 15 The principal ledger that contains all the balance sheet and income statement accounts is the general ledger True False 16 The presence of a subsidiary ledger requires the presence of a summarizing controlling account True False 17 The account for each supplier of merchandise will appear in the accounts payable subsidiary ledger True False 18 The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable True False 19 When a sale for $1,350 takes place, with a $250 deposit having been received in advance, only the $1,100 on account is recorded into the Revenue journal True False 20 Purchases of store equipment on account are recorded in the general journal True False 21 A controlling account is used to record the details of the individual accounts True False 22 A cash refund paid to a customer who overpaid an account receivable is recorded in the cash payments journal True False 23 A personal withdrawal of cash is recorded in the general journal True False 24 Services provided for cash is recorded in the revenue journal True False 25 Services provided on account is recorded in the revenue journal True False 26 Sales of office supplies for cash, at cost, to a neighboring business as an accommodation, are recorded in the revenue journal True False 27 The Other Accounts column in the Cash Receipts journal is used for recording debits to any account for which there is no special debit column True False 28 The Other Accounts column in the Cash Payments journal is used for recording debits to any account for which there is no specialized debit column True False 29 Purchase journals will have an Other Accounts Cr column True False 30 The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable True False 31 The revenue journal is to make it more efficient to record sales transactions made for cash True False 32 The post reference column of the revenue journal will reference the account number of the customer True False 33 The total of the accounts receivable subsidiary accounts and the account receivable controlling account should balance to each other at the end of the period True False 34 Adjusting journal entries are recorded in a special journal True False 35 Closing journal entries are recorded in the general journal True False 36 The accounts receivable subsidiary ledger is an example of a special journal True False 37 Posting from a revenue journal to the customer account is normally done only at the end of the month True False 38 The purchase of supplies for cash would be recorded in the purchases journal True False 39 When a large number of individual accounts with a common characteristic are grouped together, accounting calls this a controlling account True False 40 The customers ledger and the creditors ledger refer to subsidiary ledgers True False 41 The total on the "Accounts Payable Creditors Balances" report at January 31, the end of the first month of operations, agrees with the total of the Accounts Payable debit column in the cash payments journal for the same period True False 42 The accounts included on specialized journals should not be customized for a businesses particular activities True False 43 Generally, subsidiary ledgers are used for accounts that consist of a large number of individual items True False 44 Updating information in a computerized accounting system happens at the end of the month True False 45 In computerized accounting systems, reports may be generated at any time True False 46 Computerized accounting systems prevent all journalizing errors True False 47 Using the Internet to perform business transactions is called e-commerce True False 48 The term B2C refers to transactions conducted between two companies True False 49 E-commerce provides business opportunities at a higher cost True False 50 One way to report revenue earned by a company is to present it by the different segments of business True False 51 Match the transaction below with the journal or ledger in which it would be entered monthly adjustment for supplies used record payment made to vendor record sale on account to customer cash receipt posting to an individual customer account record purchase on account from vendor cash payment posting to an individual vendor account record payment received from customer General journal Accounts receivable subsidiary ledger Revenue journal Purchase journal Cash receipts journal Cash payments journal Accounts payable subsidiary ledger 52 Match the following types of journal transactions with the journal in which it would be entered Equipment purchased on account Adjusting entry Sale on account Payment for supplies bought on account Collection on account Revenue journal Cash payments journal General journal Cash receipts journal Purchases journal 53 Select the correct subsidiary ledger and appropriate posting for each of the following customer and creditor activities Accounts receivable subsidiary ledger; Accounts receivable CR Accounts receivable subsidiary ledger; Accounts receivable DR No subsidiary ledger posting Accounts payable subsidiary ledger; Accounts payable CR Accounts payable subsidiary ledger; Accounts payable DR Sales on account Collections from customers on account Purchases on account Payments to creditors on account Adjusting entry for expired insurance 54 A(n) _ system is the methods and procedures for collecting, classifying, summarizing and reporting a business’s financial and operating information A accounting B fiduciary C operations D auditing 55 The phase of accounting system installation in which the information needs of people in the organization are taken into account is A analysis B design C implementation D installation 56 Which of the following is not one of the three phases needed when changing an accounting system, either in its entirety or in part? A analysis B design C review D implementation 57 Which of the following is not part of a three-step process that a growing business uses for the evolution of its accounting systems? A analysis B design C implementation D feedback 58 The three phases of setting up an accounting system are, in order A design, implementation, analysis B analysis, design, implementation C design, analysis, implementation D implementation, design, analysis 59 The goal of systems analysis is to determine A when to implement a system B information needs C the size of the competitor's system D changes to the present system 60 Which of the following is not an element of internal controls? A to protect assets from misuse B ensure the accuracy of business information C ensure that laws and regulations are followed D ensure that company policies are in place to maximize profits 61 After an accounting system has been set up, what is the next step? A Analysis B Feedback C Implementation D Internal controls 62 The means by which the accounting system collects, summarizes, and reports accounting information is called information A reporting methods B accounting methods C control methods D processing methods 63 The primary ledger containing all the balance sheet and income statement accounts is the A general ledger B creditors ledger C customers ledger D subsidiary ledger 64 The subsidiary ledger that includes customer account activity is called the A asset ledger B accounts payable ledger C expense ledger D accounts receivable ledger 65 Every controlling account must have its own A revenue ledger B general ledger C subsidiary ledger D journal 66 At the end of the month, the total of the amount column of the revenue journal is posted as a A debit to Accounts Receivable and a credit to Cash B debit to Accounts Receivable and a credit to Fees Earned C debit to Cash and a credit to Fees Earned D debit to Cash and a credit to Accounts Payable 67 The controlling account in the general ledger that summarizes the debits and credits to the individual customers accounts in the subsidiary ledger is entitled A Purchases B Accounts Payable C Fees Earned D Accounts Receivable 68 When there are a large number of individual accounts with a common characteristic, it is common to place them in a separate ledger called a(n) A General ledger B Income Statement Ledger C Group Ledger D Subsidiary Ledger 69 A purchase of supplies for cash is recorded in the A Revenue journal B Purchases journal C Cash Receipts journal D Cash Payments journal 70 A purchase of supplies on account is recorded in the A Revenue journal B General journal C Purchases journal D Cash Payments journal 71 Which of the following transactions is recorded in the purchases journal? A purchase of store supplies on account B return of damaged office equipment C purchase of store supplies for cash D purchase of office equipment for cash 72 When posting a column total in the purchases journal, a credit should be posted to A Merchandise Inventory B Accounts Payable C Sales Returns and Allowances D Cash 73 In which journal would an adjustment for an overcharge by a creditor be recorded? A General journal B Purchases journal C Cash Payments journal D Cash Receipts journal 74 Which of the following transactions is recorded in the revenue journal? A sale of excess office equipment for cash B rendering services for cash C rendering services on account D sale of excess office equipment on account 75 Each individual entry in the Revenue Journal is posted to A the Accounts Receivable controlling account B the accounts receivable subsidiary ledger C the Revenue controlling account D the accounts receivable subsidiary ledger and the controlling account 160 The posting references in the following purchases journal are indicated by letters Identify each posting reference [(a) through (i)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required PURCHASES ) JOURNAL Date July 14 26 31 ( ( ( ( ( ( ( ( ( ( ( ( ( (1) (2) (3) Account Credited Post Ref Morton Company Jackson Co Fallon Inc Simpson Bros (a) (b) (c) (d) Accounts Payable Cr Office Supplies Dr Store Supplies Dr 1,150 4,800 7,000 2,350 15,300 (e) 4,800 7,000 11,800 (f) 1,150 1,150 (g) Other Accounts Dr Account Post Ref Equipment (h) (i) General ledger account: (e), (f), (g), (h) Subsidiary ledger account: (a), (b), (c), (d) No posting required: (i) Amount 1,950 1,950 ) ) ) ) ) ) ) ) ) ) 161 The posting references in the following revenue journal are indicated by letters Identify each posting reference [(a) through (h)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required REVENUE JOURNAL Date April 13 17 25 30 30 (1) (2) (3) Invoice No 190 191 192 193 194 195 Account Debited Hill Company North Supply Macon Inc White Products Easton Supply Karson Enterprises Post Ref (a) (b) (c) (d) (e) (f) Acct Rec Dr Fees Earned Cr 4,750 5,025 2,100 6,000 2,250 3,750 23,875 (g) (h) General ledger account: (g), (h) Subsidiary ledger account: (a), (b), (c), (d), (e), (f) No posting required: 162 The following are selected transactions related to purchases on account and cash payments completed during April of the current year Apr 10 15 17 20 25 27 30 Issued Check No 60 in payment of rent for month, $2,400 Purchased office supplies from Clauson Co., $850 Issued Check No 61 to Dame Co for $9,750 for cash purchase of equipment Purchased store supplies from Ewing Co., $425 Issued Check No 62 to Clauson Co in payment of April invoice Purchased store supplies from Patton Co., $7,500 Issued Check No 63 to Ewing Co in payment of April 10 invoice of $425 Purchased equipment from Sloan Co., $7,750 Issued Check No 64 to Patton Co.for partial payment of the April 17 invoice, $4,000 Purchased office supplies from Winthrop Co., $400 (a) (b) (c) Record the transacti ons, using the accompa nying journals Total and rule the purchase s and cash payment s journals as of April 30 Indicate the method of posting the individu al items and the totals of the purchase s and cash payment s journals in the followin g manner: (1) For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals (2) For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Posting Reference column or below the totals CASH PAYMENTS JOURNAL Date Check No Account Debited Post Ref Other Accounts Dr Accounts Payable Dr Cash Cr PUR ) CHA SES JOU RNA L Account Date Credited ( Accounts Store ) Post Payable Supplies ) Ref Cr Dr ) Other Acco unts Dr ( Of fic e ( Post Su pp lie s ( Acco Ref unt Dr Amount CASH PAYMENTS JOURNAL Date Apr 15 20 27 30 Check No 60 61 62 63 64 Account Debited Rent Expense Equipment Clauson Co Ewing Co Patton Co Post Ref G G Ö Ö Ö Other Accounts Dr 2,400 9,750 12,150 (Ö) Accounts Payable Dr 850 425 4,000 5,275 (G) Cash Cr 2,400 9,750 850 425 4,000 17,425 (G) PURCHASES JOURNAL Date Apr 10 17 25 30 30 ) Account Credited Clauson Co Ewing Co Patton Co Sloan Co Winthrop Co ( Other Accounts Dr ( Off ice ( Su pplies ( D Account r ( 50 ( ( Equipment ( 00 ( 1,2 50 ( (G ) Post Ref Ö Ö Ö Ö Ö Accounts Payable Cr 850 425 7,500 7,750 400 16,925 (G) Store Supplies Dr 425 7,500 7,925 (G) ) ) ) ) ) ) ) ) ) ) Post Ref Amount G 7,750 7,750 (Ö ) 163 Listed below are selected transactions completed by Ridge Company during March of the current year Mar 10 13 15 19 20 31 Rendered services on account to Quinton Co., Invoice No 92, $3,250 Rendered services on account to Martin Inc., Invoice No 93, $4,500 Received $5,000 in payment of monthly rent, which was due on March Received payment from Quinton Co for invoice of March Received payment from Martin Inc for balance due on invoice of March 10 Received amount due from Thomas Co on sale made in February, $5,200 Recorded cash from services rendered for cash during the month, $15,750 (a) (b) (c) Record the transacti ons, using the accompa nying revenue journal and cash receipts journal Total and rule the revenue and cash receipts journals Indicate the method of posting the individu al items and the columna r totals of the revenue and cash receipts journals in the followin g manner: (1) For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals (2) For individual items and totals to be posted to the general ledger, insert the letter "G" (as a substitute for specific account numbers) in the Posting Reference column or below the totals REVENUE JOURNAL Date Invoice No Account Debited Post Ref Accts Rec Dr Services Revenue Cr CASH RECEIPTS JOURNAL Account Credited Date Post Ref Other Accounts Cr Accts Rec Cr Cash Dr REVENUE JOURNAL Date Mar 10 31 Invoice No 92 93 Account Debited Quinton Co Martin Inc Post Ref Ö Ö Accts Rec Dr Services Revenue Cr 3,250 4,500 7,750 (G)(G) CASH RECEIPTS JOURNAL Date Mar 13 15 19 20 31 31 Account Credited Post Ref Rent Revenue Quinton Co Martin Inc Thomas Co Services Revenue G Ö Ö Ö G Other Accounts Cr Accts Rec Cr Cash Dr 5,000 15,750 20,750 (Ö) 3,250 4,500 5,200 12,950 (G) 5,000 3,250 4,500 5,200 15,750 33,700 (G) 164 Down-Under, an aquatic supply store, makes the following five payments during August Journalize them in the Cash Payments Journal as appropriate (a) (b) (c) (d) (e) On August 2nd, Down-Under paid Pondmaster, Inc with check 6420 for pumps at $435.00 each The pumps had been purchased in July on account On August 10th, Down-Under purchased $785.00 of office supplies from Business Systems with check 6421 On August 15th, Down-Under pays Aqua Magic $215.00 on account with check 6422 On August 27th, Down-Under pays an invoice for merchandise received earlier from Spindrifter, Inc for eight drains at $73.50 each They wrote check 6423 On August 31st, Down-Under purchased $65.00 of Koi clay from The Natural Wonder Company by writing check 6424 (Utilize Pond Supplies Expense) Cas h Payments Journal Date: Check Number Cash Payments Journal Date: Check Number Aug Aug 10 Aug 15 Aug 27 Aug 31 6420 6421 6422 6423 6424 Pg 17 Account Debited Post Ref Other Acct Dr: Accounts Payable: Cash Cr: Pg 17 Account Debited Pondmaster, Inc Office Supplies Aqua Magic Spindrifter, Inc Pond Supplies Expense Post Ref Other Acct Dr: Accounts Payable: Cash Cr: 2,610.00 2,610.00 785.00 215.00 588.00 65.00 785.00 215.00 588.00 65.00 165 Voyager Electronic Services has three customers in its Accounts Receivable Subsidiary Ledger with the following detail: Fred Yao Ming – Beginning balance $1,150.00 Kohl Townson – Beginning balance $850.00 Chandra Jahi – Beginning balance $1,075.00 Accounts Receivable controlling Account balance $3,075.00 Journalize then post the following five transactions to the General Journal Then post the journal entries to the Accounts Receivable Subsidiary Ledger Update the balance of the Accounts Receivable controlling Account balance On June 3rd, Kohl Townson pays $325.00 on account On June 10th, Chandra Jahi purchases $475.00 on account On June 15th, Fred Yao Ming pays $395.00 on account On June 16th, Fred Yao Ming purchases $685.00 on account On June 23rd, Kohl Townson purchases $155.00 on account GJ Page 41 General Journal Date: Account Title Post Ref: Debit: Credit: Accounts Receivabl econtrollin g Account Date: Item: BB Accounts Receivabl e - Fred Yao Ming Date: Item: BB Accounts Receivabl e - Kohl Townson Date: Item: BB Accounts Receivabl eChandra Jahi Date: Item: BB Post Ref: Debit: Credit: Balance: 3,075.00 Post Ref: Debit: Credit: Balance: 1,150.00 Post Ref: Debit: Credit: Balance: 850.00 Post Ref: Debit: Credit: Balance: 1,075.00 Ge neral Journal Date: Account Title June June 10 June 15 June 16 June 23 GJ Page 41 Post Ref: Debit: Cash A/R - Kohl Townson 325.00 A/R - Chandra Jahi Sales 475.00 Cash A/R - Fred Yao Ming 395.00 A/R - Fred Yao Ming Sales 685.00 A/R - Kohl Townson Sales 155.00 Credit: 325.00 475.00 395.00 685.00 155.00 Accounts Receivable controlling Account Date: Item: Post Ref: BB June Accounts Receivable Fred Yao Ming Date: Item: Debit: 1,315.00 Post Ref: Debit: BB June 15 June 16 Accounts Receivable Kohl Townson Date: Item: 685.00 Post Ref: Debit: BB June June 23 Accounts Receivable Chandra Jahi 155.00 CBalance: r e d i t : 3,075.00 3,670.00 0 CBalance: r e d i t : 1,150.00 755.00 0 1,440.00 CBalance: r e d i t : 850.00 525.00 0 680.00 Date: Item: Post Ref: BB June 10 Debit: 475.00 CBalance: r e d i t : 1,075.00 1,550.00 166 Sunrise Coffee Shop, in an effort to stream line their accounting system, has decided to utilize a Cash Receipts Journal in its operation Record the following transactions to the Cash Receipts Journal for the first two weeks in March, add the columns, and include the Post Reference information from the accounts given Are there any additional columns you would add to this journal? Cash Receipts Journal Date Account Credited Mar Mar Mar Mar Mar Mar Mar 10 General ledger Acct: Cash 10 Acct Receivable 12 Retail Supplies 15 Beverage Revenue 41 Food Revenue 42 Retail Revenue 43 Post Ref Cash Dr Bev Revenue Cr Food Revenue Cr Cash received for beverages $375 Cash received for food $250 Cash received for customer sales of Sunrise’s signature coffee mugs $130 Cash received for beverages $480 Cash received for food $325 Cash received for customer sales of Sunrise’s signature coffee mugs $115 Cash received on Account from Central.com $900 Customer Acct Central.com 245 FFF 367 Other Cr Cash Receipts Journal Date 3/1 3/1 3/1 3/7 3/7 3/7 3/10 Ac Post Ref cou nt Cre dite d Cas Ö h Sal es Cas Ö h Sal es Ret 43 ail Sal es Cas Ö h Sal es Cas Ö h Sal es Ret 43 ail Sal es Ce 12/245 ntra l.C om Bev C Revenue as Cr h Dr 37 375 25 13 130 48 480 32 5 11 115 90 900 2, 855 57 (1 (41) 0) Yes - Retail Revenue F o Other o Cr d R e v e n u e C r 1,145 (Ö ) 167 Read each transaction and identify the appropriate journal that it should be recorded in; Owner withdrew supplies Sale made on account Payment to vendor on account Payment received from customer on account Purchases on account Adjusting journal entry for supplies used Owner withdrew cash Company borrows money from bank Record monthly depreciation 10 Close revenue accounts at month end general journal sales journal cash disbursements journal cash receipts journal purchases journal general journal cash disbursements journal cash receipts journal general journal 10 general journal ... computerized accounting system happens at the end of the month True False 45 In computerized accounting systems, reports may be generated at any time True False 46 Computerized accounting systems. .. transactions C Even small companies use computerized accounting systems D Large companies often integrate their accounting system with their automated business systems 118 What is meant by the term B2C?... the FASB requirements 108 Computerized accounting systems A are only used by medium and large sized companies B are generally not as accurate as manual systems C record and post transactions