Question 1

Which of the following is true of a control account?

Accepted Answer

A) It is a valuation account from which balances are added to another account. 
B) Its balance equals the sum of the balances in a group of related accounts in a subsidiary ledger. 
C) It is equivalent to a contra account and represents the offsetting nature of debits and credits on a firm's financial statements. 
D) It holds individual accounts that support a general ledger account. 
A) It is a valuation account from which balances are added to another account. 
B) Its balance equals the sum of the balances in a group of related accounts in a subsidiary ledger. 
C) It is equivalent to a contra account and represents the offsetting nature of debits and credits on a firm's financial statements. 
D) It holds individual accounts that support a general ledger account.

Question 2

The cash payments journal is a special journal used to record cash payments by only currency and not by check.

Accepted Answer

A) True 
 B)False

Question 3

An accounting information system is said to have good flexibility if it:

Accepted Answer

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) can accommodate changes in the business over time. 
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) can accommodate changes in the business over time.

Question 4

Which of the following activities is handled in the Money Out section of QuickBooks?

Accepted Answer

A) entering sales receipts 
B) entering bills 
C) entering depreciation expense 
D) LIFO to FIFO adjustments in the financial statements 
A) entering sales receipts 
B) entering bills 
C) entering depreciation expense 
D) LIFO to FIFO adjustments in the financial statements

Question 5

The sale of merchandise inventory for cash is recorded in the:

Accepted Answer

A) general journal. 
B) cash receipts journal. 
C) sales journal. 
D) accounts receivable journal. 
A) general journal. 
B) cash receipts journal. 
C) sales journal. 
D) accounts receivable journal.

Question 6

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

Accepted Answer

A) internet protocol 
B) RAM 
C) server 
D) router 
A) internet protocol 
B) RAM 
C) server 
D) router

Question 7

BM Corporation makes a sale on account to Roger. In which of the following functions of QuickBooks will this transaction be recorded?

Accepted Answer

A) Pay Bills 
B) Enter Bills 
C) Invoices 
D) Receive Payments 
A) Pay Bills 
B) Enter Bills 
C) Invoices 
D) Receive Payments

Question 8

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

Accepted Answer

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

Question 9

An effective accounting information system that provides relevant information:

Accepted Answer

A) will increase the likelihood of fraud and errors. 
B) reduces the cost of employing an accounting information system. 
C) improves decision making and reduces uncertainty. 
D) should be manual to improve the accuracy of data entry. 
A) will increase the likelihood of fraud and errors. 
B) reduces the cost of employing an accounting information system. 
C) improves decision making and reduces uncertainty. 
D) should be manual to improve the accuracy of data entry.

Question 10

Assume that a company has only four customers: A, B, C, and D. The accounts receivable balance in the general ledger is $7,983 and the accounts receivable subsidiary ledger of customers A, C, and D have $1,246, $2,596 and $3,240 respectively. Calculate the amount in the accounts receivable subsidiary ledger account of customer B.

Accepted Answer

A) $7,082 
B) $2,147 
C) $1,391 
D) $901 
A) $7,082 
B) $2,147 
C) $1,391 
D) $901

Question 11

Hardware is electronic equipment that includes computers, monitors, printers, and the network that connects them.

Accepted Answer

A) True 
 B)False

Question 12

________ refers to purchasing software and data storage from a third party.

Accepted Answer

A) Cloud computing 
B) Captive computing 
C) Agile computing 
D) Stochastic computing 
A) Cloud computing 
B) Captive computing 
C) Agile computing 
D) Stochastic computing

Question 13

The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true of an effective accounting information system?

Accepted Answer

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. 
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 15

All transactions are recorded in either one of the special journals or in the general journal, but not both.

Accepted Answer

A) True 
 B)False

Question 16

An accounting information system is said to have good control characteristics if it:

Accepted Answer

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) can accommodate changes in the business over time. 
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) can accommodate changes in the business over time.

Question 17

A company has four vendors and the accounts payable subsidiary ledger shows the following balances.   Calculate the accounts payable balance in the general ledger.

Accepted Answer

A) $419,295 
B) $532,425 
C) $275,821 
D) $256,604 
A) $419,295 
B) $532,425 
C) $275,821 
D) $256,604

Question 18

Which of the following is not included in a typical cash receipts journal of a business using the perpetual inventory system?

Accepted Answer

A) Interest Revenue CR column 
B) Cost of Goods Sold DR, Merchandise Inventory CR column 
C) Sales Revenue CR column 
D) Other Accounts CR column 
A) Interest Revenue CR column 
B) Cost of Goods Sold DR, Merchandise Inventory CR column 
C) Sales Revenue CR column 
D) Other Accounts CR column

Question 19

On April 1, a hardware manufacturing firm purchases inventory on account for $700. Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.

Accepted Answer

A) Merchandise Inventory decreases by $700 and Accounts Receivable decreases by $700. 
B) Merchandise Inventory decreases by $700 and Accounts Receivable increases by $700. 
C) Merchandise Inventory increases by $700 and Accounts Payable decreases by $700. 
D) Merchandise Inventory increases by $700 and Accounts Payable increases by $700. 
A) Merchandise Inventory decreases by $700 and Accounts Receivable decreases by $700. 
B) Merchandise Inventory decreases by $700 and Accounts Receivable increases by $700. 
C) Merchandise Inventory increases by $700 and Accounts Payable decreases by $700. 
D) Merchandise Inventory increases by $700 and Accounts Payable increases by $700.

Question 20

Which of the following is true of an accounts payable subsidiary ledger?

Accepted Answer

A) It does not indicate the amount owed to each vendor. 
B) It shows only a single total for the amount owed on account. 
C) It lists vendors in alphabetical order, along with amounts paid to the vendors and the remaining amounts owed to them. 
D) Its format is entirely different from an accounts receivable subsidiary ledger. 
A) It does not indicate the amount owed to each vendor. 
B) It shows only a single total for the amount owed on account. 
C) It lists vendors in alphabetical order, along with amounts paid to the vendors and the remaining amounts owed to them. 
D) Its format is entirely different from an accounts receivable subsidiary ledger.

Exam 7: Accounting Information Systems

Which of the following is true of a control account?

The cash payments journal is a special journal used to record cash payments by only currency and not by check.

An accounting information system is said to have good flexibility if it:

Which of the following activities is handled in the Money Out section of QuickBooks?

The sale of merchandise inventory for cash is recorded in the:

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

BM Corporation makes a sale on account to Roger. In which of the following functions of QuickBooks will this transaction be recorded?

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

An effective accounting information system that provides relevant information:

Hardware is electronic equipment that includes computers, monitors, printers, and the network that connects them.

________ refers to purchasing software and data storage from a third party.

The purchases journal is a special journal used to record all purchases of merchandise inventory, office supplies, and other assets on account.

Which of the following is true of an effective accounting information system?

All transactions are recorded in either one of the special journals or in the general journal, but not both.

An accounting information system is said to have good control characteristics if it:

A company has four vendors and the accounts payable subsidiary ledger shows the following balances. Calculate the accounts payable balance in the general ledger.

Which of the following is not included in a typical cash receipts journal of a business using the perpetual inventory system?

On April 1, a hardware manufacturing firm purchases inventory on account for $700. Which of the following correctly describes the effect of this transaction? Assume a perpetual inventory system is used.

Which of the following is true of an accounts payable subsidiary ledger?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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