Test bank accounting 25th chapter 5 accounting syste

The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.. The Other Accounts column in the Cash Receipts journal is used for recording debit

Chapter 5 Accounting Systems

9. Analysis of user needs is the final phase in the creation or revision of an accounting system. 

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

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.

36. The accounts receivable subsidiary ledger is an example of a special journal. 

45. In computerized accounting systems, reports may be generated at any time.

51. Match the transaction below with the journal or ledger in which it would be entered. 

1. monthly adjustment for supplies used       General journal  

2. record payment made to vendor       Accounts receivablesubsidiary ledger  

3. record sale on account to customer       Revenue journal  

4. cash receipt posting to an individual

5. record purchase on account from

6. cash payment posting to an individual

7. record payment received from

customer

     Accounts payable subsidiary

ledger  

52. Match the following types of journal transactions with the journal in which it would be entered.

1. Equipment purchased on account      Revenue journal  

2. Adjusting entry      Cash payments journal   

4. Payment for supplies bought on account       Cash receipts journal   

5. Collection on account      Purchases journal  

53. Select the correct subsidiary ledger and appropriate posting for each of the following customer and

creditor activities.

1. Accounts receivable subsidiary ledger;

Accounts receivable CR      Sales on account  

2. Accounts receivable subsidiary ledger;

Accounts receivable DR

     Collections from customers

on account  

3. No subsidiary ledger posting      Purchases on account   

4. Accounts payable subsidiary ledger;

Accounts payable CR

     Payments to creditors on

account  

5. Accounts payable subsidiary ledger;

Accounts payable DR      Adjusting entry for expiredinsurance  

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?

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?

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

63. The primary ledger containing all the balance sheet and income statement accounts is the

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

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

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

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

76. Which of the following is always recorded in the general journal?

A. services rendered for cash

B. correction of error in billing client

C. purchases of equipment on account

D. purchases of equipment for cash

77. Which of the following is always recorded in the general journal?

A. rendering services for cash

B. purchases of supplies on account

C. rendering services on account

D. closing entries

78. Which of the following is recorded in the cash receipts journal?

A. cash withdrawn by the owner

B. cash purchase of equipment

C. cash received on customer's account

D. adjusting entry for depreciation

79. Services performed for cash should be recorded in the

A. Revenue journal

B. Purchases journal

C. Cash Receipts journal

D. Cash Payments journal

80. Which of the following is recorded in the cash payments journal?

A. adjusting entry for accrued salaries

B. receipt of cash on supplies returned

C. receipt of cash from services rendered

D. payment of employees' salaries

81. A Cash Payments journal would not include a

A. Cash credit column

B. Sales Discounts credit column

C. Accounts Payable debit column

D. Other Accounts debit column

82. In which journal is the return of supplies purchased on account recorded?

A. General journal

B. Cash Receipts journal

C. Cash Payments journal

D. Purchases journal

83. A cash purchase of supplies should be recorded in the

A. Cash Receipts journal

A. are used only for Accounts Payable and Accounts Receivable

B. may be used for various ledger accounts

C. may be used for only for the Cash account

D. are never used for more than four accounts

87. Some of the more common subsidiary ledgers are:

A. Accounts Payable, Accounts Receivable, and Owner’s Equity subsidiary ledgers

B. Accounts Receivable and Accounts Payable subsidiary ledgers

C. Accounts Receivable, Accounts Payable, Cash, Checking, Petty Cash, and Owner’s Equity subsidiary ledgers

D. Cash and Owner’s Equity subsidiary ledgers

88. If the individual subsidiary ledger accounts of Accounts Receivable and Accounts Payable contained the following data:

    Cadence Company - Vendor - $250 credit balance

    Franklin Enterprises - Customer - $750 debit balance

    Marcelo Construction - Client - $125 - debit balance

    Peyton Supplies - Supplier - $375 - credit balance

The Accounts Receivable (A/R) controlling account and the Accounts Payable (A/P) controlling account balances would be:

91. Which of the following is true about the revenue journal?

A. cash revenues and revenues on account are recorded in the revenue journal

B. only cash revenues are recorded in the revenue journal

C. only revenues on account are recorded in the revenue journal

D. unearned revenues are also recorded in the revenue journal

92. The cash receipts journal will be used for

A. only cash received from customers on account

B. all cash received

C. cash received from customers on account and cash sales

D. only cash received from cash sales

93. An “Accounts Receivable Subsidiary Ledger” report shows

A. revenues by customer for a specified date range

B. cash receipts by customer for a specified date range

C. cash payments to creditors for a specific date range

D. sales by customer as of a specific date

94. A cash investment made by the owner should be recorded on the

A. cash receipts journal

B. purchases journal

C. cash payments journal

D. revenue journal

95. A withdrawal of cash made by the owner will be found in the

A. cash receipts journal

B. cash payments journal

B. cash payments journal

C. cash receipts journal

D. general journal

97. In which journal would adjusting entries be found?

A. cash receipts journal

B. cash payments journal

C. general journal

D. purchases journal

98. In which journal would you find cash revenues recorded?

A. cash payments journal

B. general journal

C. revenues journal

D. cash receipts journal

99. In which journal would the payment of salaries be posted?

A. cash receipts journal

The following cash receipts headings have been suggested for Tower Tree-Trimming Service Company Which

of the following statements is false?

Date Account Debited Post.

A. The second column should be Account Credited

B. The Cash column should be a debit

C. The Other Accounts column should be a credit

D. The Accounts Receivable column should be a debit

103. Which transaction is normally recorded in a special journal?

C. cash payments journal

D. cash receipts journal

105. The total on the "Cash Receipts" report at January 31 should equal

A. the total revenue earned for the month of January

B. the total of the purchases journal on January 31

C. the total of the Cash Debit column of the cash receipts journal

D. the balance in Accounts Receivable at January 31

106. Processing methods:

A. are the policy and procedures that protect assets from misuse

B. must be computerized

C. are the means by which the accounting system reports information

D. ensure that business laws and regulations are followed

107. If a company uses special journals

A. it must have one for cash, receivables, and payables

B. it may have no more than four

C. the quantity and design depend on the needs of the company

D. the design must comply with 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 at the same time

D. must make use of special journals

109. Mocha Coffee Shop has asked the accountant to keep track of the purchases for beverage, food, and retail items.  The accountant has implemented a purchases journal.  Which of the following columns should be included in the new purchases journal?

A. Accounts Payable - Cr., Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Dr

B. Accounts Payable - Dr, Other - Dr, Beverage Supplies - Cr, Food Supplies -Cr, Retain Items Supplies - Cr

C. Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Dr, Cash - Cr

D. Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Cr, Accounts Payable - Dr

110. Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to utilize a Cash Receipts Journal in its operation.  If the company is to record the cash sale of food for $18 which is the correct entry?

A. Cash Cr $18, Food Revenue Dr $18,

B. Cash Dr $18, Food Revenue Dr $18

C. Cash Dr $18, Food Revenue Cr $18

D. Cash Cr $18, Food Revenue Cr $18

111. Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to utilize a Cash Receipts Journal in its operation.  What will be recorded on the post ref column of this transaction?

Cash Receipts

Journal

Credited

Post Ref Cash

Dr

Bev Revenue Cr

Food Revenue Cr

Retail Revenue Cr

General Ledger Acct: Customer Acct   Cash 10 CCC 345   Acct Receivable 12 FFF 367   Retail Supplies 15    

Beverage Revenue 41    

Food Revenue 42    

Retail Revenue 43    

A. 10

B. 15

C. 42

D. Ö

112. A computerized accounting system will not allow which of the following type of journalizing error? 

A. Entering an amount in an incorrect account

B. Reversing the debit and credit account in a transaction

C. Processing a transaction that has unequal debits and credits

D. Entering a transaction with an incorrect date

113. Which of the following is not an advantage of a computerized system over a manual system? 

A. transactions are recorded and posted at the same time

B. accuracy is usually better with a computerized system

C. current balances are always available

D. internal controls are optional to the computerized system

114. In addition to B2B and B2C transactions, e-commerce is commonly used in all of the following business activities except:

A. supply chain management

B. regulatory compliance management

C. customer relationship management

D. product life cycle management

115. Month-end posting to controlling accounts in a computerized accounting system is not required because 

A. controlling accounts are not used in computerized systems

B. transactions are posted to accounts immediately

C. the input operator can choose to post to accounts at any time

D. computerized accounting posts entry at the end of the financial year

116. Computerized accounting systems

A. is a tedious form of recordkeeping process

B. improve the timeliness of reporting

C. prevent all journalizing errors

D. are only used in medium and large businesses

117. Which of the following statements is false?

A. Most computerized accounting systems use principles from manual systems

B. Subsidiary ledgers and special journals are only useful when a business doesn’t have a large number of similar 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?

A. accounts for less than 1% of all retail sales

B. only relates to transactions between a company and a consumer

C. can improve the speed and efficiency of transactions

D. increases paperwork

120. When using a purchases journal

A. all cash and credit purchases are recorded in the journal

B. posting to creditor accounts is only done at the end of the month

C. the “Other Accounts” total is posted to Accounts Payable at month’s end

D. there will always be an “Accounts Payable Cr.” column

A. can be used for vertical, but not horizontal analysis

B. is gathered from invoice data

C. is only useful by product line

D. analysis is required by GAAP

123. When using a revenue journal:

A. both a “Fees Earned” and an “Accounts Receivable” column are included

B. both cash sales and sales on account are posted to the journal

C. revenues are normally recorded when the company sends customer invoices

D. postings to customer accounts are done at month end

124. Waller Company does business in two regional segments: North and South.  The following annual revenueinformation was determined from the accounting system’s invoice information:

Using horizontal analysis, determine the percentage change in revenues for the North region.

Round to one decimal place.

Using horizontal analysis, determine the percentage change in revenues for the South region.

Round to one decimal place.

126. The following is an example of:

127. The following is an example of:

130. Utilizing the Revenue Journal, below, journalize the following five transactions of Porshe Creations:

  (a) On March 20th Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover on invoice 887.

  (b) On March 21st Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover on invoice 908.

  (c) On March 22nd Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on invoice 938.

  (d) On March 26th Porshe sells 200 cell phone covers to Micro at $3.75 each on invoice 959.

  (e) On March 29th Porshe sells 6 cell phone covers to Charmers for $8.35 each on invoice 997.

132. The debits and credits from two transactions are presented in the following customer account:

NAME: Boogie Board Water Wear

ADDRESS:  2340 Xtreme Surf

Describe each transaction and the source of each posting.

133. The following purchase transactions occurred during August for Backcountry Kayak Company

Aug 1 Purchased kevlar kayaks for $5,600 on account from Gear Inc.

Aug 6 Purchased kevlar kayaks for $3,250 on account from Southland Company.

Aug 14 Purchased kayak paddles for $2,500 on account from Gear Inc.

Record these transactions in a purchase journal.

ADDRESS 343 Coastline Road

Describe each transaction and the source of each posting.

138. The Internet creates opportunities for improving the speed and efficiency of transactions Name and describe three key areas besides e-commerce where the Internet is being used for business purposes. 

141. Johnson Corporation provided revenue disclosures for 2009 by its major product segments in the notes to its financial statements as follows:

2 Accounts receivable control accounts

3 Electronic invoice form

4 Month-end postings to the general ledger

143. For each of the following businesses, explain how a purchase journal might be modified for the specific business.

1 North County Medical Center

2 Tri-County Farms, Inc

3 Prescott’s Quick Lube and Tire Store

1 Jon’s Auto Repair Business

2 Esquire Movie Theater

3 Beach Hut Snack Bar, Restaurant, and Lounge

146. Mobile Service Corp has the following debits and credits from two transactions  presented in the a customer account:

NAME: Gen-X Products, Inc

NAME: Roswell Communications, Inc

Address:  345 Alien Way

Describe each transaction and the source of each posting.

Address:  890 Novice Lane

Accounts Receivable Cr Cash

151. Davidson, Inc incurred the following transactions during the month of January.  Record the appropriate ones in the Cash receipts journal If a transaction should not be recorded in the Cash receipts journal, indicate where it should be posted.

  (a) On January 3rd a one-year insurance policy was purchased for $2,400.  The account number for Prepaid Insurance is 16   (b) On January 5th Davidson received a payment on account from Pasher Industries   of $625.

  (c) On January 12th Davidson made sales on account of $3,500 and sales for cash of $2,300.  The Fees Earned account

number is 41.

  (d) On January 26th Davidson received $1,250 in rent revenue from a tenant who leases a portion of their building.  The Rent

Revenue account number is 44.

  (e) On January 29th Davidson received a payment on account from Gooden, Inc for $2,000.

  (a) On February 3rd the company purchased $650 worth of supplies on account The Supplies account number is 15.

  (b) On February 5th Anderson made a payment on account to Sanders Industries  in the amount of $1,125 - check number

2004.

  (c) On February 14th Anderson bought a one-year insurance policy for $1,500.  The Prepaid Insurance account number is 14

- check number 2005   (d) On February 22nd Anderson paid monthly rent of  $2,000.  The Rent Expense account number is 63 - check number

2006.

  (e) On February 26th Anderson purchased equipment making a down payment of $3,000 (check number 2007) and agreeing

to pay the $4,000 balance in 30 days.  The Equipment account number is 18.

Other Account Dr.

153. The following purchases journal headings have been suggested for Tower Tree-Trimming Service

Company What problems do you see with these headings?

155. Westsouth Publishing reports the following segment data regarding its textbook sales:

Perform a horizontal analysis and a vertical analysis for Westsouth Publishing Company.  Round to one decimal place.

158. If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts journal are used, indicate the journal in which each of the following transactions should be recorded:

(a) Investment of additional cash in the business by the owner.

(b) Rendering of services for cash.

(c) Rendering of services on account.

(d) Receipt of cash on account from a customer.

(e) Sale of office supplies for cash, at cost, to a neighboring business.

(f) Adjustment to record supplies used at the end of the year.

(g) Closing of drawing account at the end of the year.

(a) Payment of rent.

(b) Purchase of supplies on account.

(c) Purchase of computer on account.

(d) Purchase of supplies for cash.

(e) Advance payment of a one-year fire insurance policy on the office.

(f) Adjustment to record accrued salaries at the end of the period.

(g) Adjustment to record depreciation at the end of the month.

(h) Payment of an account payable.

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.

Office Supplies Dr.

Store Supplies Dr.

) ) )

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 subsidiaryledger account, or (3) that no posting is required.

REVENUE

JOURNAL

Apr 1 Issued Check No 60 in payment of rent for month, $2,400.

       5 Purchased office supplies from Clauson Co., $850.

       9 Issued Check No 61 to Dame Co for $9,750 for cash purchase of equipment.

     10 Purchased store supplies from Ewing Co., $425.

     15 Issued Check No 62 to Clauson Co in payment of April 5 invoice.

     17 Purchased store supplies from Patton Co., $7,500.

     20 Issued Check No 63 to Ewing Co in payment of April 10 invoice of $425.

     25 Purchased equipment from Sloan Co., $7,750.

     27 Issued Check No 64 to Patton Co.for partial payment of the April 17 invoice, $4,000.

     30 Purchased office supplies from Winthrop Co., $400.

  (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

163. Listed below are selected transactions completed by Ridge Company during March of the current year.

Mar 5 Rendered services on account to Quinton Co., Invoice No 92, $3,250.

      10 Rendered services on account to Martin Inc., Invoice No 93, $4,500.

      13 Received $5,000 in payment of monthly rent, which was due on March 1.

      15 Received payment from Quinton Co for invoice of March 5.

      19 Received payment from Martin Inc for balance due on invoice of March 10.

      20 Received amount due from Thomas Co on sale made in February, $5,200.

      31 Recorded cash from services rendered for cash during the month, $15,750.

  (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

CASH

RECEIPTS

JOURNAL

164. Down-Under, an aquatic supply store, makes the following five payments during August Journalize them

in the Cash Payments Journal as appropriate

(a) On August 2nd, Down-Under paid Pondmaster, Inc with check 6420 for 6 pumps at $435.00 each.  The pumps had been

purchased in July on account.

(b) On August 10th, Down-Under purchased $785.00 of office supplies from Business Systems with check 6421.

(c) On August 15th, Down-Under pays Aqua Magic $215.00 on account with check 6422.

(d) 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.

(e) On August 31st, Down-Under purchased $65.00 of Koi clay from The Natural Wonder Company by writing check 6424 (Utilize

Pond Supplies Expense).