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Exam 7: Accounting Information Systems

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Question 41

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Internal controls include policies to direct operations toward common goals,procedures to ensure reliable financial reports,safeguards to protect company assets and methods to achieve compliance with laws and regulations.

A) True
B) False

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Question 42

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Account balances in the general ledger and the subsidiary ledgers should be proved for accuracy after posting is complete.

A) True
B) False

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Question 43

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Accounting information processes are structured to eliminate the need for professional judgment.

With on-line systems,all information storage should be off-line to protect the data.

Input devices include:

The _________________ principle requires that an accounting information system report useful,understandable,timely,and pertinent information for effective decision making.

A company entered into the following transactions.For each transaction,indicate the appropriate journal. a.Sales Journal b.Purchases Journal c.Cash Receipts Journal d.Cash Disbursements Journal e.General Journal ____ 1.Purchased merchandise for cash. ____ 2.Sold merchandise for cash. ____ 3.Purchased merchandise on credit. ____ 4.Sold merchandise on credit ____ 5.Paid cash to settle the utility bill. ____ 6.Owner invested more cash in the business. ____ 7.Recorded depreciation for the period. ____ 8.Borrowed cash from the bank. ____ 9.Bought store supplies for cash. ____ 10.Customer sent in cash to settle an account receivable.

The flexibility principle of accounting information systems prescribes that the:

Williams Company began business on May 1.They use the periodic inventory method.The following transactions involving purchases and cash disbursements occurred during the first week of May. a.Use the purchases journal and the cash disbursements journal to record these transactions. b.Prepare a schedule of accounts payable.There was no accounts payable balance on May 1.

The five basic principles of accounting information systems are control,competency,compatibility,flexibility and cost-benefit.

Subsidiary ledgers are not needed in perpetual inventory systems because the accounting system captures sufficient details to support analyses that decision makers need.

A ____________________ is a part of a company that is separately identified by its products,or services,or by the geographic market it serves.

Enterprise resource planning software is primarily used for recording journal entries.

Outdoors Unlimited uses special journals to record its daily transactions.They use the perpetual inventory system.Shown below is its cash receipts journal and selected ledger accounts.Post the cash receipts journal to the appropriate ledger accounts.

Identify the accounting information system principle below that applies to each of these situations. a. Control b. Compatibility c. Relevance d. Flexibility e. Cost-benefit _____ 1. Global Company has designed their accounting information system to be adaptable to changes in technology,the business environment,and the needs of decision makers. _____ 2. Global Company has world-wide operations that must handle several thousand different products,so the accounting information system is fairly complex,encompassing marketing and manufacturing. _____ 3. Global Company's accounting information system has policies to ensure that financial statements will be reliable,assets are protected,and relevant laws and regulations are complied with. _____ 4. Global Company's accounting information system can be improved markedly for a cost of about $30,000,000.However,the incremental benefits from such improvements are not expected to outweigh this cost. _____ 5. Global Company has designed their accounting information system so that key managers can obtain the information they need to make decisions relating to new products,sales,and controlling costs.

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

A company uses four special journals: purchases,sales,cash receipts,and cash disbursements.The following transactions were incurred during August: Record these transactions in the appropriate special journals below.

The accounts payable ledger is used for storing transactions data regarding individual customers.

Segment information is often useful to investors for evaluating a company's profitability,risk,and growth.

Individual transactions in the sales journal are regularly posted to customer accounts in the accounts payable ledger.