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Principles of Accounting, Volume 1: Financial Accounting

Chapter 7

Principles of Accounting, Volume 1: Financial AccountingChapter 7

Chapter 7

Multiple Choice

1.

D

3.

C

5.

D

7.

E

9.

C

11.

D

13.

C

15.

C

17.

A

19.

C

21.

A

23.

B

25.

B

27.

B

29.

B

31.

D

Questions

1.

A computerized accounting information system performs the same steps in the accounting cycle as a manual accounting system. Therefore, understanding how a manual system works helps us understand what a computerized system does. We cannot take a computer apart and show how the accounting information fits together, but we can show the different pieces in a paper-based system. We want an accounting information system to be more than just a black box.

3.

Scanners can input data faster and typically would produce fewer input errors.

5.

All of these areas need an accounting information system. Keeping up with all of the data for an entire year without it would be difficult. Some companies have their own accounting information to process all of their transactions except for payroll. They sometimes use a payroll processing company that specializes in processing payroll transactions for many companies. However, that payroll company also uses computers.

7.

Any special journal can require an entry to the subsidiary ledger if the entry involves accounts receivable or accounts payable.

9.

The cash column is not posted to the subsidiary ledger. Only the accounts receivable and accounts payable columns are posted to the subsidiary ledgers.

11.

Any amounts posted to Accounts Receivable or Accounts Payable should be posted daily (to the subsidiary ledger), and the account totals should be posted monthly. We also post the accounts in the Other Accounts column individually and may post daily or at the end of the month. We post all other total column amounts monthly.

13.

The four main special journals are sales journal, purchases journal, cash receipts journal, and cash disbursements journal.

15.

We would record the purchase of equipment for cash in the cash disbursements journal.

17.

We post entries from the sales journal daily to the accounts receivable subsidiary ledger but monthly to Sales and to the Accounts Receivable general ledger account.

19.

We record purchases of inventory for cash in the cash disbursements journal.

21.

Forensic accountants analyze a company’s transactions to determine if a crime has been committed. If they find evidence, they can testify in court as to their findings.

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