110. Match the following accounting system components a through e with the appropriate
application(s) 1 through 10:
a. Source documents
b. Input devices
c. Information processor
d. Information storage
e. Output devices
____ 1. Computer keyboard
____ 2. Computer hard drive
____ 3. Journal entries
____ 4. Journals
____ 5. Financial statements
____ 6. Invoice from suppliers
____ 7. Employee paychecks
____ 8. Computer monitor
____ 9. Software
____ 10. Electronic files
111. Match the following terms with the appropriate definition(s).
a. Cash disbursements journal
b. Schedule of accounts receivable
c. Relevance principle
d. Accounting information system
e. Computer network
f. Control principle
g. Business segment
h. Information processor
i. Enterprise resource planning
j. Cash receipts journal
____ 1. The people, records, methods, and equipment that collect and process data from
transactions and events, organize them in useful forms, and communicate results to decision
makers.
____ 2. A part of a company that can be separately identified by the products or services that
it provides, or by the geographic market that it serves.
____ 3. The special journal used to record all receipts of cash.
____ 4. An information system principle requiring that an accounting information system aid
managers in controlling and monitoring business activities.
____ 5. An information system principle requiring that an accounting system report useful,
understandable, timely, and pertinent information for decision making.
____ 6. Programs that manage a company’s vital operations which range from order-taking to
manufacturing to accounting.
____ 7. The special journal that is used to record all payments of cash.
____ 8. Links among computers giving different users and different computers access to
common databases and programs.
____ 9. The component of an accounting system that interprets, transforms, and summarizes
information for use in analysis and reporting.
____ 10. A list of each customer from the accounts receivable ledger with their balances and
the total.
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112. Match the following terms with the appropriate definitions.
a. Sales journal
b. Controlling account
c. Cost-benefit principle
d. Information storage
e. Cash receipts journal
f. Schedule of accounts receivable
g. Segment return on assets
h. Compatibility principle
i. Special journal
j. Purchases journal
____ 1. The special journal that is used to record all receipts of cash.
____ 2. An information system principle requiring that an accounting information system
conform with a company’s activities, personnel, and structure.
____ 3. An information system principle requiring that the benefits from an activity in an
accounting information system outweigh the costs of that activity.
____ 4. A journal used to record all purchases on credit.
____ 5. A journal used to record sales of merchandise on credit.
____ 6.A measure of the profitability of a segment, calculated as segment operating income
divided by segment average assets.
____ 7. The component of an accounting system that keeps data in a form accessible to
information processors.
____ 8. Any journal used for recording and posting transactions of a similar type.
____ 9. A general ledger account, the balance of which (after posting) equals the sum of the
balances of the accounts in a related subsidiary ledger.
____10. A list of each customer from the accounts receivable ledger with their balances and
the total.
113. A company entered into the following transactions. Match each transaction with the
appropriate journal.
a. Sales journal
b. Purchases journal
c. Cash receipts journal
d. Cash disbursements journal
e. General journal
____ 1. Borrowed $5,000 cash from the bank.
____ 2. A customer returned a $250 item purchased on account.
____ 3. Purchased merchandise on account, $2,700.
____ 4. Purchased a display rack on account for $4,700.
____ 5. Paid $65,000 cash in wages and salaries.
____ 6. Paid a utility bill for $3,400 cash.
____ 7. Purchased $1,590 of store supplies on account.
____ 8. Recorded depreciation on store equipment of $4,000.
____ 9. Returned defective inventory purchased on account, $2,900.
____ 10. Recorded cash sales of $14,700.
114. A company entered into the following transactions. For each transaction, indicate the
appropriate journal.
a. Sales Journal
b. Purchases Journal
c. Cash Receipts Journal
d. Cash Disbursements Journal
e. General Journal
____ 1. Purchased merchandise for cash.
____ 2. Sold merchandise for cash.
____ 3. Purchased merchandise on credit.
____ 4. Sold merchandise on credit
____ 5. Paid cash to settle the utility bill.
____ 6. Owner invested more cash in the business.
____ 7. Recorded depreciation for the period.
____ 8. Borrowed cash from the bank.
____ 9. Bought store supplies for cash.
____ 10. Customer sent in cash to settle an account receivable.
115. List the five basic principles of accounting information systems.
116. What are the five basic components of accounting information systems?
117. Explain the purposes, types, and uses of special journals.
118. What are controlling accounts and subsidiary ledgers? What is the relationship between
them?
119. Discuss how technology based information systems affect accounting.
120. What is the segment return on assets ratio? What is it used for?
121. Describe the posting process for special journals.
122. Explain how the amounts in the subsidiary ledgers are tested for accuracy.
123. Discuss the differences in the special journals between a company using a perpetual
inventory system and one using a periodic inventory system.
124. What is purpose of footing and crossfooting the column totals in special journals?
125. Kim Jordan, founder of New Belgium Brewing Company, knew that accounting systems
were important for success. Explain how Kim used an accounting system to assess business
operations.
126. The following information is available for some of Kalo’s segments (all amounts
are in millions):
North Africa Latin
America America
Segment sales $6,264 $694 $2,089
Segment operating income 1,494 224 1,033
Segment average assets 4,869 541 1,443
a. Determine the segment return on assets for each geographic segment.
b. Comment on the results. How do the segments compare with respect to profitability?
7-50
127. The Woodview Company uses a sales journal, purchases journal, cash receipts journal,
cash disbursements journal, and general journal. They use the perpetual method. The
following transactions occurred during the current month of December:
Dec 4 Sold merchandise on credit for $3,300 to the A&B Co., Invoice No. 313. The cost
of the goods sold is $2,145.
8 Purchased merchandise on credit for $1,800 from the Dexter Co., terms 2/10,
n/30. Invoice dated December 8.
10 Sold merchandise for $500 cash to RAC Corp., Invoice No. 314. The cost of the
good sold is $320.
13 Collected $3,300 cash from the A & B Co. for merchandise sold on December 4.
17 Paid amount owed to Dexter Co. from December 8 purchase, Check No. 1011.
24 Sold merchandise on credit for $4,500 to Dunn Corp., Invoice No. 315. The cost
of goods sold is $2,925.
27 Paid $400 cash for monthly rent to Dayton Properties, Check No. 1012.
31 Purchased equipment for $3,055 from Fort Corp., Check No. 1013.
Record the above transactions into the appropriate journals shown below.
Sales Journal
Page 15
Date Account Debited Invoice
Number PR Accounts Receivable Dr.
Sales Cr. Cost of Goods Sold Dr. Inventory Cr.
Purchases Journal
Page 16
Date Account Date of
Invoice Terms PR Accounts
Payable
Cr. Inventory
Dr. Office Supplies Dr. Other
Accounts
Dr.
Cash Receipts Journal
Page 17
Date Account Credited Explanation PR Cash
Dr. Sales
Discount
Dr. Accounts
Receivable
Cr. Sales Cr. Other
Accounts
Cr. Cost of Goods sold Dr. Inventory Cr.
Cash Disbursements Journal
Page 22
Date Ck No. Payee Account Debited PR Cash Cr. Inventory
Cr. Other
Accounts
Dr. Accounts
Payable
Dr.
Sales Journal
Page15
Date Account Debited Invoice
Number PR Accounts Receivable Dr.
Sales Cr. Cost of Goods Sold Dr. Inventory Cr.
12/4 A&B Co. 313 3,300 2,145
12/24 Dunn Corp. 315 4,500 2,925
7-53
128. A company uses a sales journal, purchases journal, cash receipts journal, cash
disbursements journal, and general journal. A perpetual inventory system is used. The
following transactions were completed by the company during the current month of October:
Oct. 3 Sold merchandise for $6,000 to the South Corp. on credit, Invoice No. 1122. Cost of the
goods sold is $3,900.
6 Sold a piece of land for $30,000 cash. The land was originally purchased for $30,000
11 Purchased supplies from Office Helpers for $420 Cash. Check No. 2795.
15 Issued a credit memo for $550 to West Corp. for returned merchandise. Cost of the
goods returned is $369.
21 Returned $330 of merchandise purchased from Min Corp. for credit on account.
24 Paid cash to Management Inc. for monthly rent of $5,400. Check No. 2796.
31 Recorded depreciation on equipment of $12,000.
Record these transactions in the appropriate journal shown below.
Sales Journal
Date Account Debited Invoice Number
PR Accounts Receivable Dr. Sales Cr. Cost of Goods Sold Dr.
Inventory Cr.
Purchases Journal
Date
Account
Date of Invoice
Terms
PR Accounts Payable Cr.
Inventory Dr. Office Supplies Dr. Other Accounts Dr.
Cash Receipts Journal
Date
Account Credited
Explanation
PR
Cash Dr. Sales Discount Dr. Accounts Receivable Cr.
Sales Cr. Other Accounts Cr. Cost of Goods Sold Dr.
Inventory Cr.
Cash Disbursements Journal
Date
Ck. No.
Payee
Account Debited
PR
Cash Cr.
Inventory Cr. Other Accounts Dr. Accounts Payable Dr.
General Journal
PR
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129. Renton Co. uses special journals to record its transactions. They use the perpetual
inventory system. Shown below are the purchasing and cash disbursement transactions for
current month of May:
May 1 Purchased merchandise for cash from Zillah Co. $5,400, Check No. 1133.
2 Purchased office equipment from Echo Co. on credit, $7,200, terms n/60. Invoice
dated May 1.
6 Paid Fox, Inc., $4,900 cash for previous purchases on account, which is net of a $100
discount, Check No. 1134.
9 Purchased merchandise from Inca, Inc. on credit, terms 1/15, n/30, $24,600. Invoice
dated May 8.
10 Paid Echo Co. cash for May 2 purchase, Check No. 1135.
18 Purchased office supplies on credit $230, terms net EOM from Howe, Inc., Invoice
dated May 17.
Record these transactions in the following journals.
Purchases Journal
Date Account Date of
Invoice Terms PR Accounts
Payable
Cr. Inventory
Dr. Office
Supplies
Dr. Other
Accounts
Dr.
Cash Disbursements Journal
Date Ck. No. Payee Account Debited PR Cash Cr. Inventory
Cr. Other
Accounts
Dr. Accounts
Payable
Dr.
7-57
130. The following special journal is taken from a merchandising company that uses the
perpetual inventory system:
Date Account
Credited Explanation PR Cash Dr. Sales
Discount
Dr. Accounts
Receivable
Cr. Sales
Cr. Other
Accounts
Cr. Cost of Goods
Sold Dr.
Inventory Cr.
1/31 Balance 51,739 1,023 13,265 5,567 33,930 3,000
2/2 H. Jones Inv. 452 x 637 13 650
2/14
Notes
Payable Note to
bank 351 1,300 1300
2/17 Sales Cash sales x 1,248 1,248 680
2/22 Equipment 181 651 651
2/28 M. Simms Inv. 403 x 156 156
55,731 1,036 14,071 6,815 35,881 3,680
(101) (413) (112) (411) (X) (511/113)
1. What is the name of the journal shown above?
2. Write an explanation for each entry in this journal.
3. What do the numbers in parentheses at the bottom of the journal indicate?
Answer:
7-59
131. A company records its transactions and events in four special journals and a general
journal. The company completed the following transactions a through j. Identify the journal in
which each transaction should be recorded.
a. Sold merchandise on account. __________________
b. Collected on a customer’s account. __________________
c. Paid the monthly electric bill. __________________
d. Purchased office supplies on credit. __________________
e. Sold merchandise for cash. __________________
f. Paid a creditor. __________________
g. A customer returned merchandise for credit. __________________
h. Purchased merchandise on account. __________________
i. Received proceeds from a note issued to the bank. __________________
j. Returned damaged merchandise to the supplier. __________________
132. A company uses four special journals: purchases, sales, cash receipts, and cash
disbursements. The following transactions were incurred during August:
Aug. 1 Purchased merchandise from Able Co. for $2,000, terms 2/10, n/30. Invoice dated
August 1
4 Sold merchandise on credit to Coe Co. for $4,000, terms 2/10, n/30, Invoice No. 245.
Cost of the goods sold is $2,320.
5 Sold merchandise on credit to Delta Corp. for $3,000, terms, 2/10, n/30, Invoice No.
246. Cost of the goods sold is $1,740.
7 Paid salaries accrued on July 31, $2,100 to manager Ms. Krenz, Check No. 756.
9 Returned merchandise costing $200 to Able Co. from August 1 purchase.
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11 Paid Able Co. for the August 1 purchase, Check No. 757.
12 Accepted merchandise returned by Coe Co. from August 4 sale. Issued credit
memorandum for $500. Cost of the goods returned is $290
13 Received cash payment from Coe Co. for August 4 sale.
19 Received cash payment in full from Delta Corp. for the August 5 sale.
28 Recorded cash sales for the month, $9,000. Cost of the goods sold is $5,220.
29 Paid cash to Incite Telephone Co. for monthly telephone bill $250, Check No.758.
Record these transactions in the appropriate special journals below.
Sales Journal
Date Account Debited Invoice Number
PR Accounts Receivable Dr. Sales Cr. Cost of Goods Sold Dr.
Inventory Cr.
Purchases Journal
Date
Account
Date of Invoice
Terms
PR Accounts Payable Cr.
Inventory Dr. Office Supplies Dr. Other Accounts Dr.
Cash Receipts Journal
Date
Account Credited
Explanation
PR
Cash Dr. Sales Discount Cr. Accounts Receivable Cr.
Sales Cr. Other Accounts Dr. Cost of Goods Sold Dr.
Inventory Cr.
Cash Disbursements Journal
Date
Ck. No.
Payee
Account Debited