Smartbook: Chapter 7 Accounting Information Systems

Matching Question An accounting information system has five basic components. Match the component on the left with its description on the right. 1. Source Document 2. Input Device 3. Information Processor 4. Information Storge 5. Output Device

1. Provides the basic information processed by an accounting system. 2. Takes information from source documents and enables its transfer to information processing. 3. Summarizes information for use in analysis and reporting. 4. The accounting system component that keeps data accessible to information processors. 5. Make accounting information available to users.

Review the transactions listed below and match them to the proper special journal on the right. 1. Supplies purchased on credit 2. Credit Sales 3. Payment to vendor for merchandise originally purchased on credit 4. Cash from credit customer in payment of their account 5. Adjusting for wages owed at the end of the period

1. Purchases journal 2. Sales journal 3. Cash disbursements journal 4. Cash receipts journal 5. General journal

Matching Question The five basic principles of accounting information are listed on the left. Match each to its definition on the right. 1. Control Principle 2. Relevance Principle 3. Cost-benefit Principle 4. Flexibility Principle 5. Compatibility Principle

1. accounting information system has internal controls. 2. accounting information system reports useful, understandable, and timely information. 3. benefits from an activity in an accounting information system outweigh the costs of that activity. 4. accounting information system be able to adapt to changes in the company and needs of decision makers. 5. accounting information system conform with a company's activities, personnel and structure.

Describe what a special journal is by selecting all of the correct statements below. (Check all that apply.)

A special journal is used to record transactions of a certain type. It is a journal that has specific columns for accounts debited and credited. Special journals allow an efficient division of labor. A special journal used as an alternative to only using a general journal.

Review the statements below and select the ones that correctly describe what a source document is. (Check all that apply.)

Accurate source documents are crucial to accounting information systems. An example of a source document can include sales receipts, invoices and checks.

Show your understanding of the posting procedure from a sales journal to a subsidiary ledger by selecting the correct statements below. (Check all that apply.)

After posting to a customer's account in the subsidiary ledger, check marks are entered in the sales journal's PR column. Posting to individual customer accounts regularly keeps customer accounts up-to-date. Individual transactions are posted daily to the customer accounts affected in the subsidiary ledger.

Describe the transactions recorded in a special purchases journal.

Any transaction where the Accounts Payable account is credited

Describe the transactions recorded in a special cash receipts journal.

Any transaction where the Cash account is debited

Cash sales should be entered into the

Cash Dr column Sales Cr column

What are the typical columns that would appear in a special sales journal? (Check all that apply.)

Cost of Goods Sold Dr./Inventory Cr. Invoice number Sales Cr./Accounts Receivable Dr. Date Customer Account Debited

Review the statements below and select the ones that are correct regarding the posting procedure from a sales journal to the general ledger and any existing subsidiary ledger. (Check all that apply.)

Customer accounts in the sales journal are posted individually in the subsidiary ledger. The sales journal's account columns are totaled at the end of the period. These totals are posted to the general ledger.

Review the transactions listed below and determine the ones that would be recorded in a special cash receipts journal. (Check all that apply.)

Equipment sold for cash Cash from credit customers in payment of their accounts Cash sales

Determine which of the statements below explain what an accounting system does. (Check all that apply.)

It collects and processes data from transactions and events. It helps users to be better informed, so they can evaluate the risks and returns of different business decisions. It organizes financial information into useful reports. It communicates financial information to decision makers.

Describe the transactions recorded in a special cash disbursements journal. (Check all that apply.)

Payment of employee wages Any transaction where the Cash account is credited Purchases of merchandise for cash Payment of utility bills

Review the transactions below and select the one that would be journalized in a general journal when specialized journals are used within the business.

Purchasing equipment by issuing a note payable

Summarize the transactions that would be entered into a general journal because they would not fit into a special journal by selecting the correct answers below. (Check all that apply.)

Receiving a note receivable from a customer Purchase returns and allowances Closing journal entries Sales returns and allowances if a sales returns and allowances journal is not used Purchase of equipment by issuing a note payable Adjusting journal entries

Describe the transactions recorded in a special sales journal.

Sales of inventory on credit

Review the transactions listed below and determine the ones that would be recorded in a special purchases journal. (Check all that apply.)

Supplies purchased on credit Equipment purchased on credit Merchandise purchased on credit

Describe the characteristics of using special journals. (Check all that apply.)

They spread out the recording responsibility for certain types of transactions. They streamline the recording and posting processes. They are designed to meet the special needs of each business.

Determine which of the following statements are correct descriptions of a subsidiary ledger. (Check all that apply.)

Two of the most common subsidiary ledgers are for Accounts Payable and Accounts Receivable. The balance in the subsidiary ledger will equal the balance of its supported account in the general ledger. The account which the subsidiary ledger supports in the general ledger is called a control account. It is a supporting ledger that contains detailed information about a general ledger account.

When posting a cash sale from a Cash Receipts journal, how would you indicate that an amount was posted to the Cash account.

X in the PR column

A subsidiary ledger can be described as:

a supporting record which contains detailed information on specific accounts in the general ledger

The procedures for posting to a subsidiary ledger from a sales journal include (daily/monthly) updating of the customer account in the subsidiary ledger and then putting a (date/number/checkmark) in the PR column of the journal to indicate the customer account was updated.

daily; checkmark

Describe the transactions that are recorded in a special sales journal by completing the following sentence. Only ___ (purchases/receipts/sales) of inventory on ___ (cash/credit) as well as the charges for sales taxes owed, are recorded in a sales journal.

sales; credit

The information to be processed by an accounting system, including supplier invoices, customer bills and sales receipts is called:

source documents

All of the following are components of an accounting system:

source documents input devices information storage