Chapter 5—Accounting Systems Key
1. Businesses must implement controls to help guide the behavior of their employees toward business
objectives.
2. The methods or procedures used to record and report financial data are called the accounting system.
3. Systems analysis is the final phase in the creation or revision of an accounting system.
4. Processing methods are the means by which the system collects, summarizes, and reports accounting
information.
5. Accounting systems evolve through a three-step process: analysis, design and feedback.
6. An accounting system is the methods and procedures used to collect, classify, summarize, and report the
businesses financial information
7. Most accounting systems evolve as the business grows and requires changes in their methods for collecting,
accumulating, and reporting information.
8. Once an accounting system has been implemented, feedback will be used to continuously analyze and
improve the system.
9. Analysis of user needs is the final phase in the creation or revision of an accounting system.
10. When specialized journals are used, the general journal is not necessary.
11. Specialized journals are books of original entry.
12. Transactions must first be recorded into the general journal before they can be entered into specialized
journals.
13. The format and number of specialized journals that a business uses depends upon the legal organization of
the business.
14. The basic procedure of posting from a revenue journal is to make all postings at the end of the month.
15. The principal ledger that contains all the balance sheet and income statement accounts is the general ledger.
16. The presence of a subsidiary ledger requires the presence of a summarizing controlling account.
17. The account for each supplier of merchandise will appear in the accounts payable subsidiary ledger.
18. The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.
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.
20. Purchases of store equipment on account are recorded in the general journal.
21. A controlling account is used to record the details of the individual accounts.
22. A cash refund paid to a customer who overpaid an account receivable is recorded in the cash payments
journal.
23. A personal withdrawal of cash is recorded in the general journal.
24. Services provided for cash is recorded in the revenue journal.
25. Services provided on account is recorded in the revenue journal.
26. Sales of office supplies for cash, at cost, to a neighboring business as an accommodation, are recorded in 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.
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.
29. Purchase journals will have an Other Accounts Cr. column.
30. The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable.
31. The revenue journal is to make it more efficient to record sales transactions made for cash.
32. The post reference column of the revenue journal will reference the account number of the customer.
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.
34. Adjusting journal entries are recorded in a special journal.
35. Closing journal entries are recorded in the general journal.
36. The accounts receivable subsidiary ledger is an example of a special journal.
37. Posting from a revenue journal to the customer account is normally done only at the end of the month.
38. The purchase of supplies for cash would be recorded in the purchases journal.
39. When a large number of individual accounts with a common characteristic are grouped together, accounting
calls this a controlling account.
40. The customers ledger and the creditors ledger refer to subsidiary ledgers.
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.
42. The accounts included on specialized journals should not be customized for a businesses particular
activities.
43. Generally, subsidiary ledgers are used for accounts that consist of a large number of individual items.
44. Updating information in a computerized accounting system happens at the end of the month.
45. In computerized accounting systems, reports may be generated at any time.
46. Computerized accounting systems prevent all journalizing errors.
47. Using the Internet to perform business transactions is called e-commerce.
48. The term B2C refers to transactions conducted between two companies.
49. E-commerce provides business opportunities at a higher cost.
50. One way to report revenue earned by a company is to present it by the different segments of business.
51. Match the transaction below with the journal or ledger in which it would be entered.
Accounts receivable subsidiary
4. cash receipt posting to an individual
6. cash payment posting to an individual
Accounts payable subsidiary
52. Match the following types of journal transactions with the journal in which it would be entered.
53. Select the correct subsidiary ledger and appropriate posting for each of the following customer and creditor
activities.
1. Accounts receivable subsidiary ledger;
2. Accounts receivable subsidiary ledger;
4. Accounts payable subsidiary ledger;
5. Accounts payable subsidiary ledger;
54. A(n) ___________ system is the methods and procedures for collecting, classifying, summarizing and
reporting a business’s financial and operating information.
55. The phase of accounting system installation in which the information needs of people in the organization are
taken into account is
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
59. The goal of systems analysis is to determine
60. Which of the following is not an element of internal controls?
61. After an accounting system has been set up, what is the next step?
62. The means by which the accounting system collects, summarizes, and reports accounting information is
called information
63. The primary ledger containing all the balance sheet and income statement accounts is the
64. The subsidiary ledger that includes customer account activity is called the
65. Every controlling account must have its own
66. At the end of the month, the total of the amount column of the revenue journal is posted as a
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
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)
69. A purchase of supplies for cash is recorded in the
70. A purchase of supplies on account is recorded in the
71. Which of the following transactions is recorded in the purchases journal?
72. When posting a column total in the purchases journal, a credit should be posted to
73. In which journal would an adjustment for an overcharge by a creditor be recorded?
74. Which of the following transactions is recorded in the revenue journal?
75. Each individual entry in the Revenue Journal is posted to
76. Which of the following is always recorded in the general journal?
77. Which of the following is always recorded in the general journal?
78. Which of the following is recorded in the cash receipts journal?
79. Services performed for cash should be recorded in the
80. Which of the following is recorded in the cash payments journal?
81. A Cash Payments journal would not include a
82. In which journal is the return of supplies purchased on account recorded?
83. A cash purchase of supplies should be recorded in the
84. When posting the column totals of a cash payments journal, a debit should be posted to
85. In which journal is the receipt of a promissory note from a customer on account recorded?
86. Subsidiary ledgers
87. Some of the more common subsidiary ledgers are:
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:
89. Which of the following is not considered a special journal?
90. Which of the following journals is called an all-purpose journal?
91. Which of the following is true about the revenue journal?
92. The cash receipts journal will be used for
93. An “Accounts Receivable Subsidiary Ledger” report shows
94. A cash investment made by the owner should be recorded on the
95. A withdrawal of cash made by the owner will be found in the
96. An owner transfers a personal automobile to the company with a fair market value of $12,000. The entry
will be made in the
97. In which journal would adjusting entries be found?
98. In which journal would you find cash revenues recorded?
99. In which journal would the payment of salaries be posted?
100.
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.
Ref.
Accounts Receivable Cr.
Cash
Cr.
Other Accounts Dr.
101. Which of the following is NOT a special journal?
102. Which of the following accounts normally has a subsidiary ledger?
103. Which transaction is normally recorded in a special journal?
104. An adjustment resulting from a creditor charging too much for merchandise would be recorded in the:
105. The total on the “Cash Receipts” report at January 31 should equal
106. Processing methods:
107. If a company uses special journals
108. Computerized accounting systems
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?
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?
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
Date
Account
Credited
Post Ref
Cash
Dr
Bev
Revenue
Cr
Food
Revenue
Cr
Retail
Revenue
Cr
3/17/14
Cash Sale
$35
$35
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
112. A computerized accounting system will not allow which of the following type of journalizing error?
113. Which of the following is not an advantage of a computerized system over a manual system?
114. In addition to B2B and B2C transactions, e-commerce is commonly used in all of the following business
activities except:
115. Month-end posting to controlling accounts in a computerized accounting system is not required because
116. Computerized accounting systems
117. Which of the following statements is false?
118. What is meant by the term B2C?
119. E-commerce
120. When using a purchases journal
121. Which of the following could not be considered a business segment?
122. Segment data:
123. When using a revenue journal:
124. Waller Company does business in two regional segments: North and South. The following annual revenue
information was determined from the accounting system’s invoice information:
Segment
2014
2013
North
$ 75,000
$100,000
South
260,000
200,000
Total revenues
$335,000
$300,000
Using horizontal analysis, determine the percentage change in revenues for the North region.
Round to one decimal place.
125. Waller Company does business in two regional segments: North and South. The following annual revenue
information was determined from the accounting system’s invoice information:
Segment
2014
2013
North
$ 75,000
$100,000
South
260,000
200,000
Total revenues
$335,000
$300,000
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:
Segment
2014
2013
Amount
Percent
College textbooks
$78,000
$55,000
$23,000
41.8%
High school textbooks
129,000
115,000
14,000
12.2%
Elementary school textbooks
105,000
121,000
(16,000)
(13.2%)
Total textbook revenue
$312,000
$291,000
$21,000
7.2%