Accouting Information Systems Ch. 2

Which of the following best explains "transaction limits" as an internal control?

A bank teller needs management approval to accept deposits over $500

A "uniform chart of accounts" means:

A company and its subsidiaries use the same chart of accounts

An organization paid for a six-month insurance policy in November. At the end of December, the organization should make an adjusting entry for:

A prepaid expense

The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information.

Accounting

The process of identifying and measuring economic events that leads to communication and decision making. The collective process of recording and processing the accounting events of a company. The steps begin when a transaction occurs and ends with its inclusion.

Accounting Cycle

Part of the accounting cycle that account for timing differences in the flow of cash and the recognition of accrued and deferred expenses and revenues.

Adjusting Journal Entries

Which of the following is not a coding system for a chart of accounts?

Alphabetic

Which of the following steps in the accounting cycle occurs first?

Analyze transactions

Part of accoutning cycle that helps to determine if something is a recordable transaction by researching which accounts are affected, increase or decrease in the accounts, account types, etc.

Analyzing transactions

Standard order of the Chart of Accounts?

Balance sheet accounts, income statements accounts then by assets, liabilities, owners equity, revenues and expenses

Type of cosing founf in the Chart of Accounts. Items are coded in blocks. For example: All asset accounts start with 1.

Block Coding

Identifying and measuring the economic information. Nowadays, maintained via information technology.

Bookkeeping

Which of the following statements is most true?

Bookkeeping is the part of accounting devoted to identifying and measuring economic information

A list of all of the accounts by name and number used by an organization in its accoutning system.

Chart of Accounts

Which of the following steps in the accounting cycle happens only at the end of the year?

Close temporary accounts to retained earnings

Human judgment is least important in

Closing entries

Tools used to provide control and facilitate documentation of the process.

Coding System

Which of the following forms of internal control relies most heavily on human judgment?

Enforcing transaction limits

Involve exchanges of goods and services with other individuals and business entities.

External Transactions

Type of coding that is broke down into a number of facets or fields, each of which signifies a unit of information. This can convey a large amount of information in one code number. Example: UPC (1st 5 digits are the manufacturer, next 2 are the product, next 2 are descriptors, etc.

Faceted Coding

Type of coding that is a more sophisticated form of block coding in that each part of the code gives specific information. Ex: zip codes (78 is Texas, 49 is Bexar, etc)

Hierarchial Coding

Source documents, scanners, barcode readers and terminals are all considered _________.

Input Mechanisms

Every accounting cycle has what 5 things?

Input mechanisms, processing steps, output mechanism, storage, internal controls

Access controls, processing controls, application controls and general controls are considered ________.

Internal Control

Include adjusting entries, closing entries, and reversing entries. Source documents are used to capture the transaction.

Internal Transactions

Type of coding that aids the memory and is designed to trigger a memory. Usually a combinations of letters and numbers.

Mnemonic Coding

RKH Corporation requires two signatures on all checks over $1,500. We can therefore assume (i) RKH will never have cash stolen; (ii) checks are sequentially numbered.

Neither i nor ii

RKH Corporation's net income for 2002 was $10,000. In 2003, its income was $15,000. We can therefore assume its 2004 income was:

Not determinable from the information given

Part of accounting cycle that checks stubs, invoices, receipts and remittance advices

Obtain information about external transactions

10 steps in the accounting process

Obtain information, analyze transactions, record transactions in journal, post transaction to ledger, prepare an unadjusted trial balance, record adjusting entires, prepare adjusted trial balance, prepare financial statements, close temp accounts to retained earning and prepare post closing trial balance

Report documents, digitalized reports and webpages are all considered __________.

Output Mechanisms

Part of accounting cycle where the journal entries are recorded in special journal. Ex: a cash journal. Reorganizes information by account.

Post Transactions to Ledger

As a form of internal control, information technology is most likely to prevent which of the following types of errors?

Posting "39" instead of "93".

Which of the following accounting cycle steps is most impacted by information technology?

Posting transactions to the ledger

Analysis, categorizing/classifying, aggregating and filtering are all considered __________.

Process Steps

Type of coding that helps if something is missing. Items are in numbered order, Ex: Checks in a checkbook

Sequential Coding

Types of coding?

Sequential, Block, Hierarchial, Mnemonic, Faceted

Happens at the end of every month or quarter. You make journal entries to zero out accounts, but don't actually close them until end of year which is called hard closing.

Soft Closing

Journals and ledgers, master and transaction files and file cabinets and offline disk storage are all considered _____________.

Storage

Which of the following is most likely to employ sequential coding?

Street Addresses

In RKH Corporation's chart of accounts, the account number for cash is "1.1.1," while the account number for "land" is "1.2.1." From that information, we can infer that:

The middle digit distinguishes current assets from long-term assets

As used in the American Accounting Association's definition of accounting, "measuring economic information" refers most directly to:

The process of bookkeeping

an economic event involving monetary items that impact the resources of an entity and its reflected in the entity's accounts.

Transaction

_____ __________ is accomplished in accounting through an accounting cycle.

Transaction processing

Part of accounting cycle that verifies the equality of debits and credits.

Unadjusted Trial Balance

Which of the following types of adjusting entries is most likely to involve human judgment?

Uncollectible receivables.

AIS is mainly concerned with capturing _____ ______.

economic events

Common internal controls associated with source documents include: (i) sequential numbering, (ii) transaction limits, (iii) trial balance.

i and ii only

Which of the following adjusting entry types helps determine the value of fixed assets: (i) depreciation, (ii) prepaid expenses.

i only

3 main goals of accounting?

identifying, measuring and communicating