Chapter 7 Flashcards
Which of the following accounting principles prescribes that an accounting information system report useful, understandable, and timely information for decision making?
a) Control principle.
b) Compatibility principle.
c) Relevance principle.
d) Flexibility principle.
e) Cost-Benefit principle.
c) Relevance principle.
The five principles of accounting information systems are:
Control, relevance, compatibility, flexibility, and cost-benefit.
Input devices include:
a) scanners
b) printers
c) software
d) ledgers
e) information processors
a) scanners
Which of the following is not a special journal:
a) sales journal
b) purchases journal
c) Cash receipts journal.
d) Cash payments journal.
e) General journal.
e) General journal.
The sales journal is used to record:
Sales of inventory on credit.
The purchases journal is used for recording:
Credit purchases.
A journal that is used to record and post transactions of a similar type is a(n):
Special journal.
When a company uses special journals, the general journal is used for transactions not covered by special journals and for:
Closing entries.
Which of the following is not a feature of special journals?
a) They are effective control procedures with respect to division of labor.
b) They allow posting of amounts as column totals instead of individual amounts.
c) They are used to record and post transactions of similar type.
d) They eliminate the need for a general journal.
e) They allow an efficient division of labor.
d) They eliminate the need for a general journal.
A list of individual accounts with a common characteristic is known as a(n):
Subsidiary ledger.
An accounts payable ledger:
a) Contains an account for each customer.
b) Lists the balances of selected accounts that are added to show the total amount of the significant long-term creditors outstanding.
c) Records credit sales made to customers.
d) Records cash sales made to customers.
e) Contains a separate account for each supplier to the company.
e) Contains a separate account for each supplier to the company.
Lopez Company purchased merchandise on credit for $7,000. When Lopez pays for the merchandise, it would record the payment in the:
Cash payments journal.
Enterprise-resource planning (ERP) software:
a) Includes the programs that manage a company’s operations.
b) Is another name for spreadsheet programs.
c) Uses batch processing of business information.
d) Is substantially declining in use.
e) Is another name for data analytics.
a) Includes the programs that manage a company’s operations.
Days’ payable outstanding is used to calculate:
The average length of time that payables are deferred until payment is made.
Alani’s Hawaiian had accounts payable of $4,500 and cost of goods sold of $76,500. The days’ payable outstanding for Alani’s Hawaiian is:
21.5 days
Days’ Payable Outstanding = (Accounts Payable / Cost of Goods Sold) × 365
Days’ Payable Outstanding = (4,500 / 76,500) × 365 = 21.5 days
After posting is completed, there may be an error if:
a) The sum of the supplier account balances does not equal the total in the purchases journal.
b) The sum of the accounts receivable ledger does not equal the balance in the Sales account.
c) The sum of the supplier account balances does not equal the general ledger Accounts Payable controlling account balance.
d) The balance in the sales journal does not equal the Accounts Receivable account balance.
e) The sum of the accounts receivable ledger does not equal the balance in the sales journal.
c) The sum of the supplier account balances does not equal the general ledger Accounts Payable controlling account balance.
The accounting principle that prescribes that an accounting information system conform with a company’s activities, personnel, and structure is the:
Compatibility principle.
Adding the Debit column totals and the Credit column totals to verify that they are equal is known as:
Crossfooting.
Sweet Treats Bakery had Accounts Payable of $17,500 and Cost of Goods Sold of $306,500. Compute days’ payable outstanding for Sweet Treats Bakery is:
20.8 days.
Days’ Payable Outstanding = (Accounts Payable / Cost of Goods Sold) × 365
Days’ Payable Outstanding = ($17,500 / $306,500) × 365 = 20.8 days
