Chapter 7

Question 1

Subsidiary ledger listing individual creditor (supplier) accounts.

Answer 1

Accounts payable ledger

Question 2

Subsidiary ledger listing individual customer accounts.

Answer 2

Accounts receivable ledger

Question 3

Special journal normally used to record all payments of cash; also called cash payments journal.

Answer 3

Cash disbursements journal

Question 4

Special journal normally used to record all receipts of cash.

Answer 4

Cash receipts journal

Question 5

Information system principle that prescribes an accounting system to conform with a company’s activities, personnel, and structure.

Answer 5

Compatibility principle

Question 6

General ledger account, the balance of which (after posting) equals the sum of the balances in its related subsidiary ledger.

Answer 6

Controlling account

Question 7

Information system principle that prescribes the benefits from an activity in an accounting system to outweigh the costs of that activity.

Answer 7

Cost-benefit principle

Question 8

Information system principle that prescribes an accounting system be able to adapt to changes in the company, business operations, and needs of decision makers.

Answer 8

Flexibility principle

Question 9

Component of an accounting system that interprets, transforms, and summarizes information for use in analysis and reporting.

Answer 9

Information processor

Question 10

Component of an accounting system that keeps data in a form accessible to information processors.

Answer 10

Information storage

Question 11

Journal normally used to record all purchases on credit.

Answer 11

Purchases journal

Question 12

Information system principle prescribing that its reports be useful, understandable, timely, and pertinent for decision making.

Answer 12

Relevance principle

Question 13

Journal normally used to record sales of goods on credit.

Answer 13

Sales journal

Question 14

List of the balances of all accounts in the accounts payable ledger and their totals.

Answer 14

Schedule of accounts payable

Question 15

List of the balances of all accounts in the accounts receivable ledger and their totals.

Answer 15

Schedule of accounts receivable

Question 16

Segment operating income divided by segment average (identifiable) assets for the period.

Answer 16

Segment return on assets

Question 17

Any journal used for recording and posting transactions of a similar type.

Answer 17

Special journal

Question 18

List of individual subaccounts and amounts with a common characteristic; linked to a controlling account in the general ledger.

Answer 18

Subsidiary ledger