Chapter 5: Accounting Systems
120.
Which of the following is not an area where the Internet is used for business purposes?
a.
business cycle management
b.
customer relationship management
c.
supply chain management
d.
product life-cycle management
121.
E-commerce
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
122.
Business may be segmented by all except
a.
region
b.
product line
c.
customer type
d.
time period
Chapter 5: Accounting Systems
123.
Connie’s Specialties Inc. offers exclusive interior design services. The following revenue information
was
determined from Connie’s records.
Current Year Prior Year
Consultation Services $1,000,000 $ 800,000
Design Services 1,800,000 1,500,000
Using a horizontal analysis, which is correct?
a.
The consultation services showed an increase in revenue of 25%.
b.
The consultation services showed a decrease in revenue of 25%.
c.
The design services showed an increase in revenue of 25%.
d.
The design services showed a decrease in revenue of 25%.
124.
Segment data
a.
can be used for vertical, but not horizontal analysis
b.
is gathered from invoices entered into the accounting system
c.
is only useful by product line
d.
analysis is required by GAAP
Chapter 5: Accounting Systems
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 data:
Segment
Current Year
Prior Year
North
$ 80,000
$100,000
South
260,000
200,000
Total revenues
$340,000
$300,000
Using horizontal analysis, determine the percentage change in revenues for the North region.
Round to one decimal place.
a. 22.4% b. (20.0%)
c. 20.0% d. (22.4%)
126.
Snelling Company does business in two regional segments: North and South. The following annual revenue
information was determined from the accounting system’s invoice data:
Segment
Current Year
Prior Year
North
$ 75,000
$100,000
South
260,000
220,000
Total revenues
$335,000
$320,000
Using horizontal analysis, determine the percentage change in revenues for the South region.
Round to one decimal place.
a. 18.2% b. 84.6%
c. (18.2%) d. 15.4%
Chapter 5: Accounting Systems
127.
The following is an example of
Segment
Current Year
Amount
Percent
College textbooks
$ 78,000
$23,000
41.8%
High school textbooks
129,000
14,000
12.2%
Elementary school textbooks
105,000
(16,000)
(13.2%)
Total textbook revenue
$312,000
$21,000
7.2%
a.
product analysis b. vertical analysis
c. horizontal analysis d. percentage analysis
128.
The following is an example of
Segment
Current Year
Percent
Prior Year
Percent
College textbooks
$ 78,000
25.0%
$ 55,000
18.9%
High school textbooks
129,000
41.3%
115,000
39.5%
Elementary school textbooks
105,000
33.7%
121,000
41.6%
Total textbook revenue
$312,000
100.0%
$291,000
100.0%
a.
product analysis b. vertical analysis
c. horizontal analysis d. percentage analysis
Chapter 5: Accounting Systems
129.
Briefly describe the three-step process of accounting system development.
130.
Define and describe an accounting system.
Chapter 5: Accounting Systems
131.
Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:
(a)
On March 20, Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover
on
invoice 887.
(b)
On March 21, Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover
on
invoice 908.
(c)
On March 22, Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on
invoice 938.
(d)
On March 26, Porshe sells 200 cell phone covers to Micro at $3.75 each on
invoice
959.
(e)
On March 29, Porshe sells 6 cell phone covers to Charmers for $8.35 each on
invoice 997.
Revenue Journal
Page 15
Date
Invoice
No.
Account Debited
Post.
Ref.
Accts. Rec.
Dr.
Sales Rev.
Cr.
Chapter 5: Accounting Systems
132.
Discuss the process of posting from a revenue journal to the subsidiary ledger and to the general ledger.
Chapter 5: Accounting Systems
133.
Two transactions were posted to the following customer account.
NAME: Boogie Board Water Wear
ADDRESS: 2340 Xtreme Surf
Date
Item
Post. Ref.
Debit
Credit
Balance
July 1
Balance
805
6
Invoice 406
R42
645
1,450
24
Invoice 456
CR56
710
740
Describe each transaction and the source of each posting.
Chapter 5: Accounting Systems
134.
The following purchase transactions occurred during August for Backcountry Kayak Excursions.
Aug. 1 Purchased kevlar kayaks (equipment) for $5,600 on account from Gear Inc.
6 Purchased kayaks paddles (supplies) for $3,250 on account from Southland Company.
14 Purchased life vests (supplies) for $2,500 on account from Gear Inc.
Record these transactions in a purchase journal.
Purchases Journal
Date
Account
Credited
Post.
Ref.
Accounts
Payable
Cr.
Supplies
Dr.
Other
Accounts
Dr.
Post. Ref.
Amount
Chapter 5: Accounting Systems
135.
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
136.
For each of the following businesses, explain how a revenue journal might be modified for the specific business.
1. Jon’s Auto Repair Business
2.
Esquire Movie Theater
3.
Beach Hut Snack Bar, Restaurant, and Lounge
Chapter 5: Accounting Systems
137.
Explain what subsidiary ledgers are and give examples of three types of subsidiary ledgers that a business
might
use.
138.
Two transactions were posted to the following customer account:
NAME: Gen-X Products, Inc.
Address: 123 My Way
Date
Item
Post. Ref.
Debit
Credit
Balance
Mar. 1
Balance
√
1,150
10
Invoice 987
R45
990
2,140
19
Invoice 995
CR78
825
1,315
Describe each transaction and the source of each posting.
Chapter 5: Accounting Systems
139.
Two transactions were posted to the following customer account:
NAME: Roswell Communications, Inc.
Address: 345 Alien Way
Date
Item
Post. Ref.
Debit
Credit
Balance
May 1
Balance
√
750
14
Invoice 522
CR230
625
125
25
Invoice 545
R115
3,500
3,625
Describe each transaction and the source of each posting.
Chapter 5: Accounting Systems
140.
Two transactions were posted to the following supplier’s (creditor’s) account:
NAME: Banner Computer Services, Inc.
Address: 890 Novice Lane
Date
Item
Post. Ref.
Debit
Credit
Balance
July 1
Balance
√
5,645
19
Invoice 45
P16
1,755
7,400
26
Invoice 39
CP36
3,500
3,900
Describe each transaction and the source of each posting.
141.
The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service
Company.
What problems do you see with these headings?
Date
Account
Credite
Post.
Ref.
Fees Earned
Cr.
Accounts
Receivable Cr.
Cash
Cr.
Other Accounts
Dr.
Chapter 5: Accounting Systems
142.
Two transactions were posted to the following supplier’s (creditor’s) account:
NAME: Xample, Inc.
Address: 567 Harrison
Blvd.
Date
Item
Post. Ref.
Debit
Credit
Balance
Nov. 1
Balance
√
125
9
Invoice 564
CP45
55
70
18
Invoice 574
P28
75
145
Describe each transaction and the source of each posting.
Chapter 5: Accounting Systems
143.
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 3, a one-year insurance policy was purchased for $2,400. The account
number for prepaid insurance is 16.
(b)
On January 5, Davidson received a payment on account from Pasher Industries
of $625.
(c)
On January 12, 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 26, Davidson received $1,250 in rent revenue from a tenant who
leases
a portion of its building. The rent revenue account number is 44.
(e)
On January 29, Davidson received a payment on account from Gooden, Inc. for $2,000.
Date
Account
Credited
Post.
Ref.
Other
Accounts
Cr.
Accounts
Receivable
Cr.
Cash
Dr.
Chapter 5: Accounting Systems
144.
Harris, Inc. incurred the following transactions during the month of February. Record the appropriate ones in
the
cash payments journal. Include posting references. If a transaction should not be recorded in the cash
payments
journal, indicate where it should be posted.
(a)
On February 3, the company purchased $650 worth of supplies on account.
The
supplies account number is 15.
(b)
On February 5, Harris made a payment on account to Sanders Industries in the
amount of $1,215 – check number 2214.
(c)
On February 14, Harris bought a one-year insurance policy for $1,500.
The
prepaid insurance account number is 14 – check number 2215
(d)
On February 22, Harris paid monthly rent of $2,000. The rent expense account
number is 63 – check number 2216.
(e)
On February 26, Harris purchased equipment making a down payment of
$3,000
(check number 2217) and agreeing to pay the $4,000 balance in 30
days. The
equipment account number is 18.
Date
Check
Number
Account Debited
Post.
Ref.
Other
Accounts
Dr.
Accounts
Payable Dr.
Cash
Cr.
Chapter 5: Accounting Systems
145.
The following purchases journal headings have been suggested for Tower Tree-Trimming Service Company.
What
problems do you see with these headings?
Date
Account
Credited
Post.
Ref.
Accounts
Payable Dr.
Accounts
Receivable
Cr.
Cash
Cr.
Other
Accounts
Dr.
146.
Two transactions were posted to the following creditor’s account.
NAME Windsurf, Inc.
ADDRESS 343 Coastline Road
Date
Item
Post. Ref.
Debit
Credit
Balance
Aug. 1
Balance
1,210
8
Invoice 333
CP38
1,210
—
15
Invoice 567
P11
735
735
Describe each transaction and the source of each posting.
Chapter 5: Accounting Systems
147.
List the four most common special journals used in accounting and describe the transactions recorded in
each
journal.
148.
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.
Chapter 5: Accounting Systems
149.
If a two-column (all-purpose) general journal, a purchases journal, and a cash payments journal are used,
indicate
the journal in which each of the following transactions should be recorded:
(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.
Chapter 5: Accounting Systems
150.
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 Account Post.
Credited Ref.
Accounts
Payable
Cr.
Office
Supplies
Dr.
Store
Supplies
Dr.
)
)
)
)
July 3
Morton Company
(a)
1,150
…..
1,150
)
7
Jackson Co.
(b)
4,800
4,800
…..
)
14
Fallon Inc.
(c)
7,000
7,000
…..
)
26
Simpson Bros.
(d)
2,350
…..
…..
)
31
15,300
11,800
1,150
)
(e)
(f)
(g)
)
(
(
(
(
( Account
Other Accounts Dr.
Post.
Ref.
Amount
( …...
( …...
( …...
( …...
( Equipment
…
…
…
…
(h)
......
......
......
......
1,950
(
1,950
(
(i)