Chapter 5--Accounting Systems
Student: ___________________________________________________________________________
1. Businesses must implement controls to help guide the behavior of their employees toward business
objectives.
True False

2. The methods or procedures used to record and report financial data are called the accounting system.
True False

3. Systems analysis is the final phase in the creation or revision of an accounting system.
True False

4. Processing methods are the means by which the system collects, summarizes, and reports accounting
information.
True False

5. Accounting systems evolve through a three-step process: analysis, design and feedback.
True False

6. An accounting system is the methods and procedures used to collect, classify, summarize, and report the
businesses financial information
True False

7. Most accounting systems evolve as the business grows and requires changes in their methods for collecting,
accumulating, and reporting information.
True False

8. Once an accounting system has been implemented, feedback will be used to continuously analyze and
improve the system.
True False


18. The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.
True False


19. When a sale for $1,350 takes place, with a $250 deposit having been received in advance, only the $1,100
on account is recorded into the Revenue journal.
True False

20. Purchases of store equipment on account are recorded in the general journal.
True False

21. A controlling account is used to record the details of the individual accounts.
True False

22. A cash refund paid to a customer who overpaid an account receivable is recorded in the cash payments
journal.
True False

23. A personal withdrawal of cash is recorded in the general journal.
True False

24. Services provided for cash is recorded in the revenue journal.
True False

25. Services provided on account is recorded in the revenue journal.
True False

26. Sales of office supplies for cash, at cost, to a neighboring business as an accommodation, are recorded in the
revenue journal.
True False

True False

36. The accounts receivable subsidiary ledger is an example of a special journal.
True False

37. Posting from a revenue journal to the customer account is normally done only at the end of the month.
True False


38. The purchase of supplies for cash would be recorded in the purchases journal.
True False

39. When a large number of individual accounts with a common characteristic are grouped together, accounting
calls this a controlling account.
True False

40. The customers ledger and the creditors ledger refer to subsidiary ledgers.
True False

41. The total on the "Accounts Payable Creditors Balances" report at January 31, the end of the first month of
operations, agrees with the total of the Accounts Payable debit column in the cash payments journal for the
same period.
True False

42. The accounts included on specialized journals should not be customized for a businesses particular
activities.
True False

43. Generally, subsidiary ledgers are used for accounts that consist of a large number of individual items.
True False

vendor
6. cash payment posting to an individual
vendor account
7. record payment received from customer

General journal ____
Accounts receivable
subsidiary ledger ____
Revenue journal ____
Purchase journal ____
Cash receipts journal ____
Cash payments journal ____
Accounts payable subsidiary
ledger ____

52. Match the following types of journal transactions with the journal in which it would be entered.
1. Equipment purchased on account
2. Adjusting entry
3. Sale on account
4. Payment for supplies bought on account
5. Collection on account

Revenue journal
Cash payments journal
General journal
Cash receipts journal
Purchases journal

____
____

____

54. A(n) ___________ system is the methods and procedures for collecting, classifying, summarizing and
reporting a business’s financial and operating information.
A. accounting
B. fiduciary
C. operations
D. auditing

55. The phase of accounting system installation in which the information needs of people in the organization are
taken into account is
A. analysis
B. design
C. implementation
D. installation

56. Which of the following is not one of the three phases needed when changing an accounting system, either in
its entirety or in part?
A. analysis
B. design
C. review
D. implementation

57. Which of the following is not part of a three-step process that a growing business uses for the evolution of
its accounting systems?
A. analysis
B. design
C. implementation
D. feedback


D. processing methods

63. The primary ledger containing all the balance sheet and income statement accounts is the
A. general ledger
B. creditors ledger
C. customers ledger
D. subsidiary ledger


64. The subsidiary ledger that includes customer account activity is called the
A. asset ledger
B. accounts payable ledger
C. expense ledger
D. accounts receivable ledger

65. Every controlling account must have its own
A. revenue ledger
B. general ledger
C. subsidiary ledger
D. journal

66. At the end of the month, the total of the amount column of the revenue journal is posted as a
A. debit to Accounts Receivable and a credit to Cash
B. debit to Accounts Receivable and a credit to Fees Earned
C. debit to Cash and a credit to Fees Earned
D. debit to Cash and a credit to Accounts Payable

67. The controlling account in the general ledger that summarizes the debits and credits to the individual
customers accounts in the subsidiary ledger is entitled
A. Purchases

72. When posting a column total in the purchases journal, a credit should be posted to
A. Merchandise Inventory
B. Accounts Payable
C. Sales Returns and Allowances
D. Cash

73. In which journal would an adjustment for an overcharge by a creditor be recorded?
A. General journal
B. Purchases journal
C. Cash Payments journal
D. Cash Receipts journal

74. Which of the following transactions is recorded in the revenue journal?
A. sale of excess office equipment for cash
B. rendering services for cash
C. rendering services on account
D. sale of excess office equipment on account

75. Each individual entry in the Revenue Journal is posted to
A. the Accounts Receivable controlling account
B. the accounts receivable subsidiary ledger
C. the Revenue controlling account
D. the accounts receivable subsidiary ledger and the controlling account


76. Which of the following is always recorded in the general journal?
A. services rendered for cash
B. correction of error in billing client
C. purchases of equipment on account
D. purchases of equipment for cash



82. In which journal is the return of supplies purchased on account recorded?
A. General journal
B. Cash Receipts journal
C. Cash Payments journal
D. Purchases journal

83. A cash purchase of supplies should be recorded in the
A. Cash Receipts journal
B. Purchase journal
C. General journal
D. Cash Payments journal

84. When posting the column totals of a cash payments journal, a debit should be posted to
A. Cash
B. Accounts Payable
C. Sales Discounts
D. Unearned Revenue

85. In which journal is the receipt of a promissory note from a customer on account recorded?
A. Revenue journal
B. Cash Receipts journal
C. General journal
D. Purchases journal

86. Subsidiary ledgers
A. are used only for Accounts Payable and Accounts Receivable
B. may be used for various ledger accounts
C. may be used for only for the Cash account

A. General journal
B. Purchases journal
C. Revenue journal
D. Accounting journal

91. Which of the following is true about the revenue journal?
A. cash revenues and revenues on account are recorded in the revenue journal
B. only cash revenues are recorded in the revenue journal
C. only revenues on account are recorded in the revenue journal
D. unearned revenues are also recorded in the revenue journal

92. The cash receipts journal will be used for
A. only cash received from customers on account.
B. all cash received.
C. cash received from customers on account and cash sales.
D. only cash received from cash sales.


93. An “Accounts Receivable Subsidiary Ledger” report shows
A. revenues by customer for a specified date range.
B. cash receipts by customer for a specified date range.
C. cash payments to creditors for a specific date range.
D. sales by customer as of a specific date.

94. A cash investment made by the owner should be recorded on the
A. cash receipts journal
B. purchases journal
C. cash payments journal
D. revenue journal


D. expense journal

100.
The following cash receipts headings have been suggested for Tower Tree-Trimming Service Company. Which
of the following statements is false?

Date

Account Debited Post.
Ref.

Accounts Receivable Cr. Cash
Cr.

Other Accounts Dr.

A. The second column should be Account Credited.
B. The Cash column should be a debit.
C. The Other Accounts column should be a credit.
D. The Accounts Receivable column should be a debit.
101. Which of the following is NOT a special journal?
A. cash receipts
B. purchases
C. accounts receivable
D. cash payments

102. Which of the following accounts normally has a subsidiary ledger?
A. capital stock
B. retained earnings
C. supplies

C. the quantity and design depend on the needs of the company
D. the design must comply with the FASB requirements

108. Computerized accounting systems
A. are only used by medium and large sized companies
B. are generally not as accurate as manual systems
C. record and post transactions at the same time
D. must make use of special journals

109. Mocha Coffee Shop has asked the accountant to keep track of the purchases for beverage, food, and retail
items. The accountant has implemented a purchases journal. Which of the following columns should be
included in the new purchases journal?
A. Accounts Payable - Cr., Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Dr.
B. Accounts Payable - Dr, Other - Dr, Beverage Supplies - Cr, Food Supplies -Cr, Retain Items Supplies - Cr.
C. Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Dr, Cash - Cr.
D. Beverage Supplies - Dr, Food Supplies - Dr, Retail Items Supplies - Dr, Other - Cr, Accounts Payable - Dr.


110. Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to utilize a Cash
Receipts Journal in its operation. If the company is to record the cash sale of food for $18 which is the correct
entry?
A. Cash Cr. $18, Food Revenue Dr. $18,
B. Cash Dr. $18, Food Revenue Dr. $18
C. Cash Dr. $18, Food Revenue Cr. $18
D. Cash Cr. $18, Food Revenue Cr. $18

111. Beachside Coffee Shop, in an effort to stream line its accounting system, has decided to utilize a Cash
Receipts Journal in its operation. What will be recorded on the post ref column of this transaction?

Cash Receipts

Cr
$35

Retail
Revenue
Cr

Customer Acct
CCC 345
FFF 367

A. 10
B. 15
C. 42
D. Ö
112. A computerized accounting system will not allow which of the following type of journalizing error?
A. Entering an amount in an incorrect account
B. Reversing the debit and credit account in a transaction
C. Processing a transaction that has unequal debits and credits.
D. Entering a transaction with an incorrect date.


113. Which of the following is not an advantage of a computerized system over a manual system?
A. transactions are recorded and posted at the same time
B. accuracy is usually better with a computerized system
C. current balances are always available
D. internal controls are optional to the computerized system

114. In addition to B2B and B2C transactions, e-commerce is commonly used in all of the following business
activities except:


119. E-commerce
A. accounts for less than 1% of all retail sales.
B. only relates to transactions between a company and a consumer
C. can improve the speed and efficiency of transactions.
D. increases paperwork.

120. When using a purchases journal
A. all cash and credit purchases are recorded in the journal.
B. posting to creditor accounts is only done at the end of the month.
C. the “Other Accounts” total is posted to Accounts Payable at month’s end.
D. there will always be an “Accounts Payable Cr.” column.

121. Which of the following could not be considered a business segment?
A. Region
B. Product
C. Customer Type
D. All of these could be considered business segments.

122. Segment data:
A. can be used for vertical, but not horizontal analysis.
B. is gathered from invoice data.
C. is only useful by product line.
D. analysis is required by GAAP.

123. When using a revenue journal:
A. both a “Fees Earned” and an “Accounts Receivable” column are included.
B. both cash sales and sales on account are posted to the journal.
C. revenues are normally recorded when the company sends customer invoices.
D. postings to customer accounts are done at month end.

Segment
North
South
Total revenues

2014
$ 75,000
260,000
$335,000

2013
$100,000
200,000
$300,000

Using horizontal analysis, determine the percentage change in revenues for the South region.
Round to one decimal place.

A. 30.0%
B. 77.6%
C. (30.0%)
D. (77.6%)
126. The following is an example of:

Segment
College textbooks
High school textbooks
Elementary school textbooks
Total textbook revenue


2013
$55,000
115,000
121,000
$291,000

Percent
18.9%
39.5%
41.6%
100%

A. product analysis
B. vertical analysis
C. horizontal analysis
D. percentage analysis
127. The following is an example of:

Segment
College textbooks
High school textbooks
Elementary school textbooks
Total textbook revenue

2014
$78,000
129,000
105,000
$312,000



Post
Ref.

Account Debited

A/R Dr.
Sales Rev Cr.

131. Discuss the process of posting from a revenue journal to the subsidiary ledger and to the general ledger.

132. The debits and credits from two transactions are presented in the following customer account:
NAME: Boogie Board Water Wear
ADDRESS: 2340 Xtreme Surf

Date
July 1
July 6
July 24

Item
Balance
Invoice 406
Invoice 456

Post Ref

Debit

R42


Acct Cr

Post Ref

Acct Pay Cr

Kevlar
KayaksDr

Other Accts
Dr

Post Ref

Amount

134. The debits and credits from two transactions are presented in the following creditor’s account:
NAME Windsurf, Inc.
ADDRESS 343 Coastline Road

Date
Aug 1
8
15

Item
Balance
Invoice 333
Invoice 567

138. The Internet creates opportunities for improving the speed and efficiency of transactions. Name and
describe three key areas besides e-commerce where the Internet is being used for business purposes.

139. Morgan Company has the following segment revenues for fiscal 2014 and 2013.
2014
(in millions)
$825.0
325.5
215.5
1,366.0

U.S.
Canada
Other countries
Total Revenues

2013
(in millions)
$600.00
345.5
168.5
1,114.0

Prepare a horizontal analysis of the segment data using 2013 as the base year.

140. Morgan Company has the following segment revenues for fiscal 2011 and 2010.

U.S.
Canada
Other countries