SB7-1

Cash sales should be entered into the

Cash Dr column Sales Cr column

Recall some of the typical columns that would appear in a special cash receipts journal. (Check all that apply.)

Cash Dr. Accounts Receivable Cr. Other Accounts Cr. Date Sales Cr.

Select the statement below that describes what the Other Accounts Cr. column is used for in a cash receipts journal.

Cash received from sources other than cash sales and cash received from credit customers

The five basic principles of accounting information are listed on the left. Match each to its definition on the right.

Control principle - accounting information system has internal controls. Relevance principle - accounting information system reports useful, understandable, and timely information. Cost-benefit principle - benefits from an activity in an accounting information system outweigh the costs of that activity. Flexibility principle - accounting information system be able to adapt to changes in the company and needs of decision makers. Compatibility principle - accounting information system conform with a company's activities, personnel and structure.

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

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

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 sales Cash from credit customers in payment of their accounts

Identify common subsidiary ledgers created and used by businesses. (Check all that apply.)

Equipment subsidiary ledger Accounts payable subsidiary ledger Accounts receivable subsidiary ledger

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

Individual amounts in the Other Accounts Dr. column are posted immediately. Individual transactions are posted immediately to the accounts payable subsidiary ledger. To be sure that total debits and credits in a columnar journal are equal, we cross-foot the column totals before posting them. After posting column totals to the general ledger, the general ledger account numbers are entered below the column totals of the journal.

Recall the typical columns that would appear in a purchases journal. (Check all that apply.)

Inventory Dr. Supplies Dr. Other Accounts Dr. Accounts Payable Cr.

Determine which of the transactions below would be entered into the Other Accounts Cr. column of a cash receipts journal. (Check all that apply.)

Investments sold for cash Equipment sold for cash Cash refund for merchandise purchase returned to the vendor

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

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

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

Merchandise purchased on credit Equipment purchased on credit Supplies purchased on credit (Any transaction where the Accounts Payable account is credited)

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.)

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

Review the posting references to be used in the general ledger that refer to journals by matching the posting reference on the left with its journal on the right.

S - Sales journal R - Cash receipts journal P - Purchases journal D - Cash disbursements journal G - General journal

Describe the transactions recorded in a special sales journal.

Sales of inventory on credit

Describe the compatibility principle by selecting the correct statement below.

The principle prescribes that an accounting information system conform with a company's activities, personnel and structure.

Determine which of the following statements best describes the control principle as it relates to an accounting information system.

The principle prescribes that an accounting information system have internal controls.

Show your understanding of the posting procedure from a sales journal to the general ledger by selecting the correct statements below.

The total of the Accounts Receivable Dr./Sales Cr. column is posted as a debit to the Accounts Receivable account in the general ledger. After posting column totals to the general ledger, the general ledger account numbers are entered below the column totals of the sales journal. The total of the Accounts Receivable Dr./Sales Cr. column is posted as a credit to the Sales account in the general ledger. The sales journal's account columns are totaled at the end of the period, and these totals are posted to the general ledger.

Determine which of the statements below are accurate regarding a schedule of accounts payable. (Check all that apply.)

The total of the schedule of accounts payable should equal the balance of the Accounts Payable account in the general ledger. A schedule of accounts payable lists each vendor and the balance owed. Preparing a schedule of accounts payable is one way to prove the accuracy of the general ledger and subsidiary ledger balances.

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

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

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

Describe what "crossfooting" means by completing the following sentence. Crossfooting in a journal means to (add/subtract) the Debit column totals, then (add/subtract) the Credit column totals, and (subtract/add/compare) the two sums to determine (equality/income).

add, add, compare, equality

Internal control procedures can be summarized as procedures that help managers protect _______ (liabilities/expenses/assets) and to achieve compliance with laws and ________ (contracts/management/regulations).

assets; regulations

The ______ principle prescribes that an accounting information system conform with a company's activities, personnel and structure.

compatibility

The ______ -benefit principle prescribes that the benefits from an activity in an accounting information system outweigh the costs of that activity.

cost

Illustrate your understanding of an accounts receivable subsidiary ledger by completing the following sentence. A separate record for each ________ (asset/customer/vendor) is kept in the accounts receivable subsidiary ledger which serves as a supporting record to its ________ (control/contra/equity) account in the general ledger.

customer; control

If a company has _____ (few/many) sales returns and allowances, they can record them in the general journal.

few

Explain what a controlling account is by completing the following sentence. A controlling account appears in the _______ (general/subsidiary) ledger and is supported by information in a separate ________ (general/subsidiary) ledger.

general; subsidiary

The _____ principle prescribes that an accounting information system report useful, understandable, and timely information for decision making.

relevance

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

Review the transactions listed below and match them to the proper special journal on the right.

Supplies purchased on credit - Purchases journal Credit sales - Sales journal Payment to vendor for merchandise originally purchased on credit - Cash disbursements journal Cash from credit customer in payment of their account - Cash receipts journal Adjusting for wages owed at the end of the period. - General journal

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

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

All of the following are recorded in a cash receipts journal except:

sales on account

On Nov. 10, ABC Co. purchased $200 of merchandise for resale on account with credit terms of 2/10, n/30. Assuming the gross method of recording purchases is used, show how to journalize the transaction into the purchases journal by selecting all of the correct actions below. (Check all that apply.)

$200 is entered into the Inventory Dr. column. The vendor's name is entered into the Account column. $200 is entered into the Accounts Payable Cr. column.

Review the statements below and choose the one that correctly describes a controlling account.

A control account appears in the general ledger and is supported by a subsidiary ledger.

Which of the statements below describes a schedule of accounts payable?

A schedule of accounts payable is a list of vendor accounts at a point in time and their current balance owed.

Review the statements below and choose the one that is correct regarding a schedule of accounts receivable.

A schedule of accounts receivable is a list of customer accounts and balances prepared to prove the balance in the Accounts Receivable account.

Show your understanding of an accounts payable subsidiary ledger by selecting the correct statements below. (Check all that apply.)

Accounts Payable is the controlling account in the general ledger. Every credit transaction that impacts a vendor account will also impact the Accounts Payable account in the general ledger. The total of the vendor accounts in the subsidiary ledger will also be the total in the Accounts Payable account in the general ledger. The accounts payable subsidiary ledger is a supporting record of all short-term vendor amounts owed in the company.

What does footing a column in a journal mean?

Adding the column of numbers

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.)

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

Identify the advantages of using subsidiary ledgers. (Check all that apply.)

Allows removal of excessive details and detailed accounts from the general ledger Provides up-to-date information readily available on specific customers and suppliers

The flexibility principle can be characterized by which of the following statements. (Check all that apply.)

An accounting information system should be able to adapt to changes in the business environment. An accounting information system should recognize that regulations, company activities and technological advances are constantly evolving. An accounting information system should be able to adapt to changes in the needs of company decision makers. An accounting information system should be able to adapt to changes in the company.

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

Any transaction affecting the Other Account Cr. column is posted immediately to the general ledger. To be sure that total debits and credits in a columnar journal are equal, we cross-foot the column totals before posting them. The journal's account columns are totaled and these totals are posted to the general ledger (except for the Other Accounts column). Individual customer accounts are updated daily into the accounts receivable subsidiary ledger. The total of the Accounts Receivable Cr. column is posted as a credit to the Accounts Receivable account in the general 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 disbursements journal. (Check all that apply.)

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

Describe the transactions recorded in a special cash receipts journal.

Any transaction where the Cash account is 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

Determine which of the statements below are accurate regarding how to prove the accuracy of account balances in the general ledger and subsidiary ledgers after posting. (Check all that apply.)

If the total of the schedule of accounts receivable equals the balance in the control account, the subsidiary ledger is assumed correct. The total of the schedule of accounts receivable should equal the balance of the Accounts Receivable account in the general ledger. A trial balance of the general ledger is prepared to confirm that debits equal credits. Preparing a schedule of accounts receivable is one way to prove the accuracy of the general ledger and subsidiary ledger balances. A schedule of accounts receivable lists each customer and the balance owed.

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

Recall the posting references to be used in the general ledger that refer to journals by completing the following sentence. When posting to the general ledger from the sales journal, a _______ (J/S/X) should be entered in the PR column of the ledger and when posting to the general ledger from the cash disbursements journal, a ______ (C/D/X) should be entered in the PR column of the ledger.

S; D

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

The account which the subsidiary ledger supports in the general ledger is called a control account. 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. It is a supporting ledger that contains detailed information about a general ledger account.

Show your understanding of an accounts receivable ledger by selecting the correct statements below. (Check all that apply.)

The accounts receivable subsidiary ledger is a supporting record of all customer accounts in the company. The Accounts Receivable account in the general ledger is the control account of the accounts receivable subsidiary ledger. The total of the accounts receivable subsidiary ledger will also be the total in the Accounts Receivable account in the general ledger. Every transaction that impacts a customer account will also impact the general ledger Accounts Receivable account.

How do you record sales returns and allowances in a company that uses special journals? (Check all that apply.)

The company can create a separate sales returns and allowances journal to record these types of transactions. The returns can be entered into the general journal.

The relevance principle prescribes what information is reported in an accounting information system. Determine which of the statements below is (are) correct regarding the relevance principle. (Check all that apply.)

The principle prescribes that an accounting information system reports information that is timely for effective decision making. The principle prescribes that an accounting information system reports information that is useful. The principle prescribes that an accounting information system reports information that is timely. The principle prescribes that an accounting information system reports information that is understandable.

Review the statements below and choose the one that best summarizes the cost-benefit principle.

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

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

To be sure that total debits and credits in a columnar journal are equal, we cross-foot the column totals before posting them. After posting column totals to the general ledger, the general ledger account numbers are entered below the column totals of the journal. The journal's account columns (other than Other Accounts Dr.) are totaled and posted to the general ledger. Any transaction affecting the Other Account Dr. column is posted immediately to the general ledger. The total of the Accounts Payable Cr. column is posted as a credit to the Accounts Payable account 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

The ______ principle prescribes that an accounting information system be able to adapt to changes.

flexibility

Explain what a controlling account is by completing the following sentence. A controlling account appears in the ______ (general/subsidiary) ledger and is supported by information in a separate ______ (general/subsidiary) ledger.

general; subsidiary

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

Illustrate your understanding of an accounts payable subsidiary ledger by completing the following sentence. A separate record for each ______ (customer/liability/supplier) is kept in the accounts payable subsidiary ledger which serves as a supporting record to its ______ (controlling/contra/equity) account in the general ledger.

supplier; control