ACCOUNTING 26TH EDITION BY WARREN -TEST BANK

 

Instant Download – Complete Test Bank With Answers

 

 

Sample Questions Are Posted Below

 

1. The methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information are called the accounting system.
   1. True
   2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

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

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

5. An accounting system design consists of internal controls and information processing methods.
   1. True
   2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

6. Most accounting systems evolve as the business grows and requires changes in its methods for collecting, accumulating, and reporting information.
   1. True
   2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

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

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

8. Designing a system to meet user needs is the final phase in the creation or revision of an accounting system.
   1. True
   2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

9. When specialized journals are used, the general journal is not
   1. True
   2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

10. Specialized journals are books of original entry.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

11. Transactions must first be recorded into the general journal before they can be entered into specialized journals.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

12. The format and number of specialized journals that a business uses depends upon the legal organization of the
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.03 – Business Forms

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

13. The basic procedure of posting from a revenue journal is to make all postings at the end of the month.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

14. The principal ledger that contains all the balance sheet and income statement accounts is the general ledger.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

15. The presence of a subsidiary ledger requires the presence of a summarizing control account in the general ledger.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

16. An account for each supplier of merchandise will appear in the accounts payable subsidiary ledger.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

18. 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 in the revenue journal.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Challenging

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

19. Even when special journals are used, purchases of store equipment on account are recorded in the general journal.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

20. A control account is used to record the details of the individual subsidiary accounts.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

22. Even when special journals are used, a personal withdrawal of cash is recorded in the general journal.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

23. Services provided for cash are recorded in the revenue journal.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

24. Services provided on account are recorded in the revenue journal.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

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

 

ANSWER:                                  False

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

26. The Other Accounts column in the cash receipts journal is used for recording debits to any account for which there is no special debit column.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

27. The Other Accounts column in the cash payments journal is used for recording debits to any account for which there is no specialized debit column.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

28. Purchases journals will have an Other Accounts Cr. column.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

29. The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

30. The revenue journal is designed for the efficient recording of cash sales transactions.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

31. The Post. Ref. column of the revenue journal will reference the account number of the customer.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

32. The total of the accounts receivable subsidiary accounts and the balance of the accounts receivable control account should equal each other at the end of the period.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

33. Adjusting journal entries are recorded in a special journal.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

34. Even when special journals are used, closing journal entries are recorded in the general journal.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.08 – Closing Entries

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

35. The accounts receivable subsidiary ledger is an example of a special journal.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

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

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

38. When a large number of individual accounts with a common characteristic are grouped together in a separate ledger, the summarizing account in the general ledger is called a control account.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

39. The customers ledger and the creditors ledger refer to subsidiary ledgers.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

40. The total on the “Accounts Payable Creditor 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
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

41. The columns included in special journals are standardized for all businesses.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

42. Generally, subsidiary ledgers are used for general ledger accounts that consist of a large number of individual items.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

43. In a computerized accounting system, all postings happen automatically at the end of the month.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

44. In computerized accounting systems, reports may be generated at any time.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

45. Computerized accounting systems prevent all journalizing errors.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

46. Using the Internet to perform business transactions is called e-commerce.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

47. The term B2C refers to transactions conducted between two companies.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

48. E-commerce provides additional business opportunities but at the cost of reduced speed and efficiency.
    1. True
    2. False

 

ANSWER:                                  False

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

 

 

49. One way to report revenue earned by a company is to present it by the different segments of business.
    1. True
    2. False

 

ANSWER:                                  True

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.BB.01 – Industry

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

50. A(n)  system is the methods and procedures for collecting, classifying, summarizing and reporting a business’s financial and operating information.
    1. accounting
    2. fiduciary
    3. operations
    4. auditing

 

ANSWER:                                  a

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

51. The phase of accounting system installation in which the information needs of people in the organization are taken into account is
    1. analysis
    2. design
    3. implementation
    4. installation

 

ANSWER:                                  a

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

52. Which of the following is not one of the three phases needed when changing an accounting system, either in its entirety or in part?
    1. analysis
    2. design
    3. review
    4. implementation

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

53. Which of the following is not part of a three-step process that a growing business uses for the evolution of its accounting system?
    1. analysis
    2. design
    3. implementation
    4. feedback

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

54. The three phases of setting up an accounting system are, in order
    1. design, implementation, analysis
    2. analysis, design, implementation
    3. design, analysis, implementation
    4. implementation, design, analysis

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

55. The goal of systems design is to meet
    1. when to implement a system
    2. user needs
    3. the size of the competitor’s system
    4. changes to the present system

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.BB.01 – Industry

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

56. Which of the following is not an element of internal controls?
    1. to protect assets from misuse
    2. ensure the accuracy of business information
    3. ensure that laws and regulations are followed
    4. ensure that company policies are in place to maximize profits

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.10 – Internal Control

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

57. After an accounting system has been set up, what is the next step?
    1. create the chart of accounts
    2. obtain input from users to analyze and improve the system
    3. implement analysis and design
    4. set up internal controls

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

58. Processing methods
    1. are the policies and procedures that protect assets from misuse
    2. must be computerized.
    3. are the means by which the accounting system collects, summarizes, and reports accounting information
    4. ensure that business laws and regulations are followed

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement ACCT.AICPA.FN.04 – Reporting BUSPROG: Analytic

59. The means by which the accounting system collects, summarizes, and reports accounting information is called information
    1. reporting methods
    2. accounting methods
    3. control methods
    4. processing methods

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

60. The primary ledger containing all the balance sheet and income statement accounts is the
    1. general ledger
    2. creditors ledger
    3. customers ledger
    4. subsidiary ledger

 

ANSWER:                                  a

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

61. The subsidiary ledger that includes customer account activity is called the
    1. asset ledger
    2. accounts payable ledger
    3. expense ledger
    4. accounts receivable ledger

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

62. Every controlling account must have its own
    1. revenue ledger
    2. general ledger
    3. subsidiary ledger
    4. journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.10 – Internal Control

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

63. At the end of the month, the total of the amount column of the revenue journal is posted as a
    1. debit to Accounts Receivable and a credit to Cash
    2. debit to Accounts Receivable and a credit to Fees Earned
    3. debit to Cash and a credit to Fees Earned
    4. debit to Cash and a credit to Accounts Payable

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

64. The controlling account in the general ledger that summarizes the individual customer accounts in the subsidiary ledger is entitled
    1. Purchases
    2. Accounts Payable
    3. Fees Earned
    4. Accounts Receivable

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.5-02 – 5-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

65. When there are a large number of individual accounts with a common characteristic, it is common to place them in a separate ledger called a(n)
    1. general ledger
    2. income statement ledger
    3. group ledger
    4. subsidiary ledger

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

66. A purchase of supplies for cash is recorded in the
    1. revenue journal
    2. purchases journal
    3. cash receipts journal
    4. cash payments journal

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

67. A purchase of supplies on account is recorded in the
    1. revenue journal
    2. general journal
    3. purchases journal
    4. cash payments journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

68. Which of the following transactions is recorded in the purchases journal?
    1. purchase of store supplies on account
    2. return of damaged office equipment
    3. purchase of store supplies for cash
    4. purchase of office equipment for cash

 

ANSWER:                                  a

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

69. When posting column totals in the purchases journal, a credit should be posted to
    1. Merchandise Inventory
    2. Accounts Payable
    3. Sales Returns and Allowances
    4. Cash

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

70. In which journal would an adjustment for an overcharge by a creditor be recorded?
    1. general journal
    2. purchases journal
    3. cash payments journal
    4. cash receipts journal

 

ANSWER:                                  a

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

71. Which of the following transactions is recorded in the revenue journal?
    1. sale of excess office equipment for cash
    2. rendering services for cash
    3. rendering services on account
    4. sale of excess office equipment on account

 

ANSWER:                                  c

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

72. Each individual entry in the revenue journal is posted to
    1. the accounts receivable controlling account
    2. the accounts receivable subsidiary ledger
    3. the revenue controlling account
    4. the accounts receivable subsidiary ledger and the controlling account

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

73. Which of the following is always recorded in the general journal?
    1. services rendered for cash
    2. correction of error in billing client
    3. purchases of equipment on account
    4. purchases of equipment for cash

 

ANSWER:                                  b

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

74. Which of the following is always recorded in the general journal?
    1. rendering services for cash
    2. purchases of supplies on account
    3. rendering services on account
    4. closing entries

 

ANSWER:                                  d

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

75. Which of the following is recorded in the cash receipts journal?
    1. cash withdrawn by the owner
    2. cash purchase of equipment
    3. cash received on customer’s account
    4. adjusting entry for depreciation

 

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

76. Services performed for cash should be recorded in the
    1. revenue journal
    2. purchases journal
    3. cash receipts journal
    4. cash payments journal

 

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

77. Which of the following is recorded in the cash payments journal?
    1. adjusting entry for accrued salaries
    2. receipt of cash on supplies returned
    3. receipt of cash from services rendered
    4. payment of employees’ salaries

 

ANSWER:                                  d

DIFFICULTY:                           Challenging Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

78. A cash payments journal would not include a
    1. Cash credit column
    2. Sales Discounts credit column
    3. Accounts Payable debit column
    4. Other Accounts debit column

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

79. In which journal is the return of supplies purchased on account recorded?
    1. general journal
    2. cash receipts journal
    3. cash payments journal
    4. purchases journal

 

ANSWER:                                  a

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

80. A cash purchase of supplies should be recorded in the
    1. cash receipts journal
    2. purchase journal
    3. general journal
    4. cash payments journal

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

81. When posting the column totals of a cash payments journal, a debit should be posted to
    1. Cash
    2. Accounts Payable
    3. Sales Discounts
    4. Unearned Revenue

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

82. In which journal is the receipt of a promissory note from a customer on account recorded?
    1. revenue journal
    2. cash receipts journal
    3. general journal
    4. purchases journal

 

ANSWER:                                  c

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

83. Subsidiary ledgers
    1. are used only for Accounts Payable and Accounts Receivable
    2. may be used for various general ledger accounts
    3. may be used only for the Cash account
    4. are never used for more than four accounts

 

ANSWER:                                  b

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

84. Some of the more common subsidiary ledgers are
    1. accounts payable, accounts receivable, and owner’s equity subsidiary ledgers
    2. accounts receivable and accounts payable subsidiary ledgers
    3. accounts receivable, accounts payable, cash, checking, petty cash, and owner’s equity subsidiary ledgers
    4. cash and owner’s equity subsidiary ledgers

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

85. If the individual subsidiary ledger accounts contained the following data:

Cadence Company – Vendor – $200 – credit balance

Franklin Enterprises – Customer – $750 – debit balance

Marcelo Construction – Client – $125 – debit balance

Peyton Supplies – Supplier – $375 – credit balance

 

The accounts receivable (A/R) control account and the accounts payable (A/P) control account balances would be: a. A/R – $1,375, A/P – $375

1. A/R – $525, A/P – $175 c. A/R – $875, A/P – $575 d. A/R – $750, A/P – $700

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

86. Which of the following is not considered a special journal?
    1. purchases journal
    2. cash receipts journal
    3. general journal
    4. cash payments journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

87. Which of the following journals is called an all-purpose journal?
    1. general journal
    2. purchases journal
    3. revenue journal
    4. accounting journal

 

ANSWER:                                  a

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

88. Which of the following is true about the revenue journal?
    1. Cash revenues and revenues on account are recorded in the revenue journal.
    2. Only cash revenues are recorded in the revenue journal.
    3. Only revenues on account are recorded in the revenue journal.
    4. Unearned revenues are also recorded in the revenue journal.

 

ANSWER:                                  c

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

89. The cash receipts journal will be used for
    1. only cash received from customers on account
    2. all cash received for any purpose
    3. cash received from customers on account and cash sales
    4. only cash received from cash sales

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

90. An “Accounts Receivable Customer Balances” report shows
    1. revenues by customer for a specified date range
    2. customer balances owed as of a specific date
    3. cash payments to creditors for a specific date range
    4. sales by customer as of a specific date

 

ANSWER:                                  b

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.15 – Current Assets Reporting

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

91. A cash investment made by the owner should be recorded in the
    1. cash receipts journal
    2. purchases journal
    3. cash payments journal
    4. revenue journal

 

ANSWER:                                  a

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

92. A withdrawal of cash made by the owner will be found in the
    1. cash receipts journal
    2. cash payments journal
    3. revenue journal
    4. purchases journal

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

93. An owner transfers a personal automobile to the company with a fair market value of $12,000. The entry will be made in the
    1. purchases journal
    2. cash payments journal
    3. cash receipts journal
    4. general journal

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

94. In which journal would adjusting entries be found?
    1. cash receipts journal
    2. cash payments journal
    3. general journal
    4. purchases journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

95. In which journal would you find cash revenues recorded?
    1. cash payments journal
    2. general journal
    3. revenues journal
    4. cash receipts journal

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

96. In which journal would the payment of salaries be posted?
    1. cash receipts journal
    2. special journal
    3. cash payments journal
    4. expense journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

97. The following cash receipts journal 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.

1. The second column should be Account Credited.
2. The Cash column should be a debit.
3. The Other Accounts column should be a credit.
4. The Accounts Receivable column should be a debit.

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

98. Which of the following is not a special journal?
    1. cash receipts journal purchases journal
    2. accounts receivable journal d. cash payments journal

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

99. Which of the following general ledger accounts normally has a subsidiary ledger?
    1. Capital Stock Retained Earnings
    2. Supplies d. Accounts Payable

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

100. Which transaction is normally recorded in a special journal?
     1. sales returns depreciation expense
     2. purchases on account d. issued stock dividend

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

101. An adjustment resulting from a creditor reducing the amount owed on an unpaid invoice due to an invoicing error would be recorded in the
     1. general journal
     2. purchases journal
     3. cash payments journal
     4. cash receipts journal

 

ANSWER:                                  a

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

102. If a company uses special journals
     1. it must have one for cash, receivables, and payables
     2. it may have no more than four
     3. the quantity and design depend on the needs of the company
     4. the design must comply with the FASB requirements

 

ANSWER:                                  c

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

103. 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?
     1. Accounts Payable Cr., Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Dr.
     2. Accounts Payable Dr., Other Accounts Dr., Beverage Supplies Cr., Food Supplies Cr., Retain Items Cr.
     3. Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Dr., Cash Cr.
     4. Beverage Supplies Dr., Food Supplies Dr., Retail Items Dr., Other Accounts Cr., Accounts Payable Dr.

 

ANSWER:                                  a

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

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

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

105. When using a revenue journal
     1. separate “Fees Earned” and “Accounts Receivable” columns are included
     2. both cash sales and sales on account are recorded in the journal
     3. revenues are normally recorded when the company sends customer invoices
     4. postings to customer accounts are done at month’s end

 

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

106. Beachside Coffee Shop, in an effort to streamline its accounting system, has decided to utilize a cash receipts journal in its operations. If the company records the cash sale of food for $18, which is the correct entry?
     1. Cash Cr., $18; Food Revenue Dr., $18
     2. Cash Dr., $18; Food Revenue Dr., $18
     3. Cash Dr., $18; Food Revenue Cr., $18
     4. Cash Cr., $18; Food Revenue Cr., $18

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

107. A basic manual accounting system includes all of the following except
     1. a chart of accounts
     2. a two­column journal
     3. a general ledger
     4. a computer on which the system runs

 

ANSWER:                                  d

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

108. Which of the following statements is false?
     1. Most computerized accounting systems use principles from manual systems.
     2. Subsidiary ledgers and special journals are only useful when a business doesn’t have a large number of similar transactions.
     3. Even small companies use computerized accounting systems.
     4. Large companies often integrate their accounting system with their automated business systems.

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

109. A computerized accounting system will not allow which of the following types of journalizing errors?
     1. entering an amount in an incorrect account
     2. reversing the debit and credit accounts in a transaction
     3. processing a transaction that has unequal debits and credits
     4. entering a transaction with an incorrect date

 

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

110. Computerized accounting systems
     1. are only used by medium- and large-sized companies
     2. are generally not as accurate as manual systems
     3. record and post transactions at the same time
     4. must make use of special journals

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

111. The total on the “Cash Receipts” report generated by QuickBooks software at January 31 would be equal to the
     1. total revenue earned for the month of January
     2. total of the purchases journal on January 31
     3. total of the Cash Dr. column of the cash receipts journal in a manual system
     4. balance in Accounts Receivable at January 31

 

ANSWER:                                  c

DIFFICULTY:                           Challenging

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

112. Put the following into the correct order for processing a sale on account with QuickBooks.
113. Prepare reports.
114. Record the sale by completing an electronic invoice form.
115. Record collection of payment by completing a “receive payment” form.
     1. B­C­A
     2. A­B­C
     3. B­A­C
     4. C­B­A

 

ANSWER:                                  a

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

113. Which of the following is not an advantage of a computerized system over a manual system?
     1. Transactions are recorded and posted at the same time.
     2. Accuracy is usually better with a computerized system.
     3. Current balances are always available.
     4. Internal controls are optional to the computerized system.

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

114. A recent trend in which the accounting system and data are stored and distributed over the Internet by a third-party is called
     1. supply chain management.
     2. cloud software solutions.
     3. customer management.
     4. life­cycle computing.

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.02 – Leveraging Technology BUSPROG: Technology

 

115. Month-end postings to control accounts in a computerized accounting system are not required because
     1. control accounts are not used in computerized systems
     2. transactions are posted to accounts immediately
     3. the input operator can choose to post to accounts at any time
     4. transactions are posted at the end of the financial year

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

116. Computerized accounting systems
     1. provide a tedious form of record keeping
     2. improve the timeliness of reporting
     3. prevent all journalizing errors
     4. are only used in medium and large businesses

 

ANSWER:                                  b

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

117. What is meant by the term B2C?
     1. balance to cash
     2. business to cash
     3. book to capital
     4. business to consumer

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

118. In addition to B2B and B2C transactions, the Internet is commonly used in all of the following business activities except
     1. supply chain management regulatory compliance management
     2. customer relationship management d. product life cycle management

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

119. When Richard Miller purchases a fishing pole through Amazon.com, he is utilizing
     1. B1C e­commerce.
     2. B2B e­commerce.
     3. B2C e­commerce.
     4. B1B e­commerce.

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.03 – Business Forms

ACCT.AICPA.FN.02 – Leveraging Technology BUSPROG: Technology

 

 

 

120. Which of the following is not an area where the Internet is used for business purposes?
     1. business cycle management
     2. customer relationship management
     3. supply chain management
     4. product life­cycle management

 

ANSWER:                                  a

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.AICPA.FN.02 – Leveraging Technology

BUSPROG: Technology

 

121. E-commerce
     1. accounts for less than 1% of all retail sales
     2. only relates to transactions between a company and a consumer
     3. can improve the speed and efficiency of transactions
     4. increases paperwork

 

ANSWER:                                  c

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms ACCT.AICPA.BB.01 – Industry

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

122. Business may be segmented by all except
     1. region
     2. product line
     3. customer type
     4. time period

 

ANSWER:                                  d

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

123. Connie’s Specialties Inc. offers exclusive interior design services. The following revenue information was determined from Connie’s records.

 

Current Year         Prior Year

Consultation Services               $1,000,000       $   800,000

Design Services                         1,800,000         1,500,000

 

Using a horizontal analysis, which is correct?

1. The consultation services showed an increase in revenue of 25%.
2. The consultation services showed a decrease in revenue of 25%.
3. The design services showed an increase in revenue of 25%.
4. The design services showed a decrease in revenue of 25%.

 

ANSWER:                                  a

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

124. Segment data
     1. can be used for vertical, but not horizontal analysis
     2. is gathered from invoices entered into the accounting system
     3. is only useful by product line
     4. analysis is required by GAAP

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

125. Waller Company does business in two regional segments: North and South. The following annual revenue information was determined from the accounting system’s invoice data:

 

Segment	Current Year	Prior Year
North	$  80,000	$100,000
South	260,000	200,000
Total revenues	$340,000	$300,000

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

22. 22.4% b. (20.0%)
23. 20.0% d. (22.4%)

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

126. Snelling Company does business in two regional segments: North and South. The following annual revenue information was determined from the accounting system’s invoice data:

 

Segment	Current Year	Prior Year
North	$  75,000	$100,000
South	260,000	220,000
Total revenues	$335,000	$320,000

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

18. 18.2% b. 84.6%
19. (18.2%) d. 15.4%

 

ANSWER:                                  a

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

127. The following is an example of

 

Segment	Current Year	Prior Year	Amount	Percent
College textbooks	$  78,000	$  55,000	$23,000	41.8%
High school textbooks	129,000	115,000	14,000	12.2%
Elementary school textbooks	105,000	121,000	(16,000)	(13.2%)
Total textbook revenue	$312,000	$291,000	$21,000	7.2%

1. product analysis vertical analysis
2. horizontal analysis d. percentage analysis

 

ANSWER:                                  c

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

128. The following is an example of

 

Segment	Current Year	Percent	Prior Year	Percent
College textbooks	$  78,000	25.0%	$  55,000	18.9%
High school textbooks	129,000	41.3%	115,000	39.5%
Elementary school textbooks	105,000	33.7%	121,000	41.6%
Total textbook revenue	$312,000	100.0%	$291,000	100.0%

1. product analysis vertical analysis
2. horizontal analysis d. percentage analysis

 

ANSWER:                                  b

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

129. Briefly describe the three-step process of accounting system development.

ANSWER:

(1)	Analysis. Identify the needs of those who use the business’s financial information and determine how the system should provide this information.
(2)	Design. The system is designed so that it will meet the users’ needs.
(3)	Implementation. The chosen system is put in place.

DIFFICULTY:                           Easy

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.05 – Accounting Cycle

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

130. Define and describe an accounting system.

ANSWER:                                  An accounting system is the methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information.  Accounting systems for large companies often record more than just basic transaction data (i.e. aircraft maintenance for an airline).  These systems evolve through the process of (1) analysis of information needs, (2) system design, and (3) implementation of the design. Input from users is used to analyze and improve the system.

DIFFICULTY:                           Moderate

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-01 – 05-01 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

131. Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:

• On March 20, Porshe sells 25 cell phone covers to Xtreme at $4.50 per cover on invoice 887.
• On March 21, Porshe sells 5 cell phone covers to Sidekick for $7.50 per cover on invoice 908.
• On March 22, Porshe sells 18 cell phone covers to Rock-On at $4.25 per cover on invoice 938.
• On March 26, Porshe sells 200 cell phone covers to Micro at $3.75 each on invoice
• On March 29, Porshe sells 6 cell phone covers to Charmers for $8.35 each on invoice 997.

 

Revenue Journal				Page 15
Date	Invoice No.	Account Debited	Post. Ref.	Accts. Rec. Dr. Sales Rev. Cr.

 

 

 

ANSWER:

Revenue Journal				Page 15
Date	Invoice No.	Account Debited	Post Ref.	A/R Dr. Sales Rev Cr.
March 20	887	Xtreme		112.50
March 21	908	Sidekick		37.50
March 22	938	Rock-On		76.50
March 26	959	Micro		750.00
March 29	997	Charmers		50.10

 

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

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

ANSWER:                                  Each transaction is posted individually to customer accounts in the accounts receivable subsidiary ledger. This should be done on a regular basis to keep customer balances current.

 

To provide a trail of the entries posted to the subsidiary and general ledgers, the source of the entries is indicated in the Posting Reference column by inserting the letter R for Revenue Journal and the page number of the revenue journal.

 

A check mark is inserted in the Posting Reference column to indicate that the transaction has been posted to the subsidiary ledger.

 

At the end of the month, the column total is posted to the general ledger as a debit to Accounts Receivable and a credit to Fees Earned. This total is equal to the sum of the month’s debits to the individual accounts in the subsidiary ledger.

DIFFICULTY:                           Challenging

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

133. Two transactions were posted to the following customer account.

 

NAME:  Boogie Board Water Wear ADDRESS:  2340 Xtreme Surf

 

Date	Item	Post. Ref.	Debit	Credit	Balance
July   1	Balance				805
6	Invoice 406	R42	645		1,450
24	Invoice 456	CR56		710	740

 

Describe each transaction and the source of each posting.

 

 

ANSWER:

July 6	Sold $645 on account to Boogie Board Water Wear, itemized on Invoice 406.  Amount posted from page R42 of the revenue journal
July 24	Cash of $710 was collected from Boogie Board Water Wear, Invoice 456.  Amount posted from page CR56 of the cash receipts journal.

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

134. The following purchase transactions occurred during August for Backcountry Kayak Excursions.

 

Aug.   1   Purchased kevlar kayaks (equipment) for $5,600 on account from Gear Inc.

6   Purchased kayaks paddles (supplies) for $3,250 on account from Southland Company.

14   Purchased life vests (supplies) for $2,500 on account from Gear Inc.

 

Record these transactions in a purchase journal.

 

Purchases Journal
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount

 

ANSWER:

Purchases Journal
Date	Account Credited	Post. Ref.	Accounts Payable Cr.	Supplies Dr.	Other Accounts Dr.	Post. Ref.	Amount
Aug.   1	Gear Inc.		5,600		Equipment		5,600
6	Southland Co.		3,250	3,250
14	Gear Inc.		2,500	2,500

DIFFICULTY:                           Easy

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

135. For each of the following businesses, explain how a purchase journal might be modified for the specific business.
136. North County Medical Center
137. Tri-County Farms, Inc.
138. Prescott’s Quick Lube and Tire Store

ANSWER:                                  The purchases journal for North County Medical Center may include columns for pharmaceutical products (IV solutions, injectable drugs), linens (sheets, blankets, pillows), and disposable medical equipment (needles, syringes).

 

The purchases journal for Tri-County Farms may include columns for the various types of seeds (corn, wheat), livestock (cows, hogs, sheep), fertilizer, and fuel.

 

The purchases journal for Prescott’s Quick Lube and Tire Store may include columns for oil products (motor oil, grease), tires, and maintenance fluids (transmission fluid, antifreeze).

DIFFICULTY:                           Moderate

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

136. For each of the following businesses, explain how a revenue journal might be modified for the specific business.
137. Jon’s Auto Repair Business
138. Esquire Movie Theater
139. Beach Hut Snack Bar, Restaurant, and Lounge

ANSWER:                                  Jon’s Auto Repair Business might modify the revenue journal to include columns for each type of major repair services. In addition, columns for warranty repairs and sales taxes may be added.

 

The Esquire Movie Theater might modify the revenue journal to include admissions, concessions, and game room revenues from video games in the lobby.

 

The Beach Hut Snack Bar, Restaurant, and Lounge might modify the revenue journal to include columns for snack bar sales, restaurant sales, and liquor sales in the lounge. In addition, columns for credit card charges and sales taxes may be added.

DIFFICULTY:                           Challenging

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

137. Explain what subsidiary ledgers are and give examples of three types of subsidiary ledgers that a business might

ANSWER:                                  A subsidiary ledger groups a large number of accounts with a common characteristic together.  Each subsidiary ledger is summarized in the general ledger by a controlling account. Most commonly, companies use accounts receivable and accounts payable subsidiary ledgers to detail individual customer or vendor accounts. Businesses often use subsidiary ledgers to keep track of equipment purchased, its location, and other equipment data.

DIFFICULTY:                           Easy

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

138. Two transactions were posted to the following customer account:

 

NAME:   Gen-X Products, Inc. Address:  123 My Way

Date	Item	Post. Ref.	Debit	Credit	Balance
Mar.  1	Balance	√			1,150
10	Invoice 987	R45	990		2,140
19	Invoice 995	CR78		825	1,315

 

Describe each transaction and the source of each posting.

ANSWER:

Mar. 10      Sold $990 on account to Gen-X Products Inc., itemized on Invoice No. 987. Amount posted from page 45 of the revenue journal.

 

19      Collected cash of $825 from Gen-X Products Inc. (Invoice No. 995). Amount posted from page 78 of the cash receipts journal.

DIFFICULTY:                           Moderate

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.5-02 – 5-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

139. Two transactions were posted to the following customer account:

 

NAME:   Roswell Communications, Inc. Address:  345 Alien Way

Date	Item	Post. Ref.	Debit	Credit	Balance
May   1	Balance	√			750
14	Invoice 522	CR230		625	125
25	Invoice 545	R115	3,500		3,625

 

Describe each transaction and the source of each posting.

ANSWER:

May 14     Collected cash of $625 from Roswell Communications Inc. (Invoice No. 522). Amount posted from page 230 of the cash receipts journal.

 

• Sold $3,500 on account to Roswell Communications Inc., itemized on Invoice No. 545. Amount posted from page 115 of the revenue

DIFFICULTY:                           Moderate

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

140. Two transactions were posted to the following supplier’s (creditor’s) account:

 

NAME:    Banner Computer Services, Inc. Address:  890 Novice Lane

Date	Item	Post. Ref.	Debit	Credit	Balance
July     1	Balance	√			5,645
19	Invoice 45	P16		1,755	7,400
26	Invoice 39	CP36	3,500		3,900

 

Describe each transaction and the source of each posting.

ANSWER:

July 19     Purchased $1,755 on account from Banner Computer Services Inc., itemized on Invoice 45. Amount posted from page 16 of the purchases journal.

 

• Paid $3,500 to Banner Computer Services Inc. on account (Invoice 39). Amount posted from page 36 of the cash payments journal.

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

141. The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?

 

Date	Account Credited	Post. Ref.	Fees Earned Cr.	Accounts Receivable Cr.	Cash Cr.	Other Accounts Dr.

 

ANSWER:                                  The Cash column is for debits (not credits).  The Other Accounts column is for credits (not debits).  A better order of columns would be to place the Other Accounts Cr. column to the left of the Fees Earned Cr. column.

DIFFICULTY:                           Challenging

Bloom’s: Understanding

LEARNING OBJECTIVES:        ACCT.WARD.16.5-02 – 5-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

142. Two transactions were posted to the following supplier’s (creditor’s) account:

 

NAME:    Xample, Inc. Address:  567 Harrison Blvd.

Date	Item	Post. Ref.	Debit	Credit	Balance
Nov.    1	Balance	√			125
9	Invoice 564	CP45	55		70
18	Invoice 574	P28		75	145

 

Describe each transaction and the source of each posting.

ANSWER:

Nov.   9     Paid $55 to Xample Inc. on account (Invoice 564). Amount posted from page 45 of the cash payments journal.

 

18     Purchased $75 on account from Xample Inc., itemized on Invoice 574. Amount posted from page 28 of the purchases journal.

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

143. Davidson, Inc. incurred the following transactions during the month of January. Record the appropriate ones in the cash receipts journal. If a transaction should not be recorded in the cash receipts journal, indicate where it should be

 

• On January 3, a one-year insurance policy was purchased for $2,400. The account number for prepaid insurance is 16.
• On January 5, Davidson received a payment on account from Pasher Industries of $625.
• On January 12, Davidson made sales on account of $3,500 and sales for cash of $2,300.

The fees earned account number is 41.

• On January 26, Davidson received $1,250 in rent revenue from a tenant who leases a portion of its building. The rent revenue account number is 44.
• On January 29, Davidson received a payment on account from Gooden, Inc. for $2,000.

 

​ Date	Account Credited	Post. Ref.	Other Accounts Cr.	Accounts Receivable Cr.	Cash Dr.

 

ANSWER:

 

Date	Account Credited	Post. Ref.	Other Account Cr.	Accounts Receivable Cr.	Cash Dr.
Jan.   5	Pasher Industries			625	625
Jan. 12	Fees Earned	41	2,300		2,300
Jan. 26	Rent Revenue	44	1,250		1,250
Jan. 29	Gooden, Inc.			2,000	2,000

 

Transaction (a) should be recorded in the cash payments journal and the sales on account in transaction (c) should be recorded in the revenue journal.

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

144. Harris, Inc. incurred the following transactions during the month of February. Record the appropriate ones in the cash payments journal. Include posting references. If a transaction should not be recorded in the cash payments journal, indicate where it should be posted.

• On February 3, the company purchased $650 worth of supplies on account. The supplies account number is 15.
• On February 5, Harris made a payment on account to Sanders Industries in the amount of $1,215 – check number 2214.
• On February 14, Harris bought a one-year insurance policy for $1,500. The prepaid insurance account number is 14 – check number 2215
• On February 22, Harris paid monthly rent of $2,000. The rent expense account number is 63 – check number 2216.
• On February 26, Harris purchased equipment making a down payment of $3,000 (check number 2217) and agreeing to pay the $4,000 balance in 30 days. The equipment account number is 18.

 

Date	Check Number	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.

 

ANSWER:

Date	Check Number	Account Debited	Post. Ref.	Other Account Dr.	Accounts Payable Dr.	Cash Cr.
2/05/10	2004	Sanders Industries			1,125	1,125
2/14/10	2005	Prepaid Insurance	14	1,500		1,500
2/22/10	2006	Rent Expense	63	2,000		2,000
2/26/10	2007	Equipment	18	3,000		3,000

 

Transaction (a) should be recorded in the purchases journal as should the $4,000 balance due on the equipment in transaction (e).

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

145. The following purchases journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?

 

Date	Account Credited	Post. Ref.	Accounts Payable Dr.	Accounts Receivable Cr.	Cash Cr.	Other Accounts Dr.

 

ANSWER:                                  Accounts Receivable and Cash are not needed in the purchase journal, since this journal is for purchases on account by Tower.  Accounts Payable should be a credit.  There should be a Supplies Dr. column. Also, there should be two columns to the extreme right with the headings “Post. Ref.” and “Amount.”

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

146. Two transactions were posted to the following creditor’s account.

 

NAME         Windsurf, Inc. ADDRESS   343 Coastline Road

Date	Item	Post. Ref.	Debit	Credit	Balance
Aug.    1	Balance				1,210
8	Invoice 333	CP38	1,210		—
15	Invoice  567	P11		735	735

 

Describe each transaction and the source of each posting.

 

ANSWER:

Aug 8	Payment of $1,210 to Windsurf, Inc. on account (Invoice No. 333).  Amount posted from page CP38 of the cash payments journal.
Aug 15	Purchased $735 on account from Windsurf, Inc. itemized on Invoice No. 567.  Amount posted from page P11 of the purchases journal.

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

147. List the four most common special journals used in accounting and describe the transactions recorded in each

ANSWER:                                  Purchases journal – for purchases made on account Revenue journal – for sales made on account

Cash receipts journal – for all cash receipt transactions Cash payment journal – for all cash payment transactions

DIFFICULTY:                           Easy

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

148. If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts journal are used, indicate the journal in which each of the following transactions should be recorded:

• Investment of additional cash in the business by the owner.
• Rendering of services for cash.
• Rendering of services on account.
• Receipt of cash on account from a customer.
• Sale of office supplies for cash, at cost, to a neighboring business.
• Adjustment to record supplies used at the end of the year.
• Closing of drawing account at the end of the year.

ANSWER:                                  (a)    cash receipts journal

• cash receipts journal
• revenue journal
• cash receipts journal
• cash receipts journal
• general journal
• general journal

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

149. If a two-column (all-purpose) general journal, a purchases journal, and a cash payments journal are used, indicate the journal in which each of the following transactions should be recorded:

• Payment of rent.
• Purchase of supplies on account.
• Purchase of computer on account.
• Purchase of supplies for cash.
• Advance payment of a one-year fire insurance policy on the office.
• Adjustment to record accrued salaries at the end of the period.
• Adjustment to record depreciation at the end of the month.
• Payment of an account payable.

ANSWER:                                  (a)    cash payments journal

• purchases journal
• purchases journal
• cash payments journal
• cash payments journal
• general journal
• general journal
• cash payments journal

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

150. The posting references in the following purchases journal are indicated by letters. Identify each posting reference [(a) through (i)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required.

 

PURCHASES JOURNAL

 

Date                 Account             Post. Credited             Ref.			Accounts Payable Cr.	Office Supplies Dr.	Store Supplies Dr.	) ) )
						)
July  3	Morton Company	(a)	1,150	…..	1,150	)
7	Jackson Co.	(b)	4,800	4,800	…..	)
14	Fallon Inc.	(c)	7,000	7,000	…..	)
26	Simpson Bros.	(d)	2,350	…..	…..	)
31			15,300	11,800	1,150	)
			(e)	(f)	(g)	)

 

(

(

 

 

 

 

( (     Account Other Accounts Dr.   Post. Ref.     Amount (     …… (     …… (     …… (     …… (     Equipment   … … … … (h) …… …… …… …… 1,950 (     1,950 (     (i)

(

 

 

 

 

 

 

 

 

ANSWER:                                  (1)    General ledger account: (e), (f), (g), (h)

• Subsidiary ledger account: (a), (b), (c), (d)
• No posting required: (i)

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

151. The following are selected transactions related to purchases on account and cash payments completed during April of the current year.

April   1  Issued Check No. 60 in payment of rent for month, $2,400.

5  Purchased office supplies from Clauson Co., $850.

• Issued Check No. 61 to Dame Co. for $9,750 for cash purchase of equipment.
• Purchased store supplies from Ewing Co., $425.

 

15  Issued Check No. 62 to Clauson Co. in payment of April 5 invoice.

17  Purchased store supplies from Patton Co., $7,500.

20  Issued Check No. 63 to Ewing Co. in payment of April 10 invoice of $425.

25  Purchased equipment from Sloan Co., $7,750.

27  Issued Check No. 64 to Patton Co. for partial payment of the April 17 invoice, $4,000.

30  Purchased office supplies from Winthrop Co., $400.

 

• Record the transactions in the purchases and cash payments journals.
• Total and rule the purchases and cash payments journals as of April 30.
• Indicate the method of posting the individual items and the totals of the purchases and cash payments journals in the following manner:
  • For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals.
  • For individual items and totals to be posted to the general ledger, insert the letter “G” (as a substitute for specific account numbers) in the Posting Reference column or below the totals.

 

CASH PAYMENTS JOURNAL

 

				Other	Accounts
	Check	Account	Post.	Accounts	Payable	Cash
Date	No.	Debited	Ref.	Dr.	Dr.	Cr.

 

PURCHASES JOURNAL                                           )

 

					)
			Accounts	Store	)
	Account	Post.	Payable	Supplies	)
Date	Credited	Ref.	Cr.	Dr.	)

 

(                                                                                           (                Other              Accounts              Dr.                    (   Office

(

Supplies

Post.

(     Dr.         Account            Ref.              Amount   

 

 

 

ANSWER:

CASH PAYMENTS JOURNAL

 

Date	Check   No.	Account Debited	Post. Ref.	Other Accounts      Dr.	Accounts Payable     Dr.	Cash   Cr.
Apr. 1	60	Rent Expense	G	2,400	…..	2,400
9	61	Equipment	G	9,750	…..	9,750
15	62	Clauson Co.	√	…..	850	850
20	63	Ewing Co.	√	…..	425	425
27	64	Patton Co.	√	…..	4,000	4,000
30				12,150	5,275	17,425
				(√)	(G)	(G)

 

PURCHASES JOURNAL                              )

Date	Account Credited	Post. Ref.	Accounts Payable      Cr.	Store Supplies      Dr.	) ) ) )
Apr.  5	Clauson Co.	√	850	…..	)
10	Ewing Co.	√	425	425	)
17	Patton Co.	√	7,500	7,500	)
25	Sloan Co.	√	7,750	…..	)
30	Winthrop Co.	√	400	…..	)
30			16,925	7,925	)
			(G)	(G)	)

 

 

(                                                                                              (             Other Accounts Dr.      

(     Office
(    Supplies		Post.
(        Dr.	Account	Ref.	Amount
(      850	……	…	…..
(       …..	……	…	…..
(       …..	……	…	…..
(       …..	Equipment	G	7,750

 

(      400                    ……                  ……                            …..

(   1,250                                                                          7,750

 

 

(      (G)                                                                             (√ )

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

152. Listed below are selected transactions completed by Ridge Company during March of the current year.

 

Mar.   5  Rendered services on account to Quinton Co., Invoice No. 92,$3,250.

10  Rendered services on account to Martin Inc., Invoice No. 93, $4,500.

13  Received $5,000 in payment of monthly rent, which was due on March 1.

15  Received payment from Quinton Co. for invoice of March 5.

• Received payment from Martin Inc. for balance due on invoice of March 10.
• Received amount due from Thomas Co. on sale made in February, $5,200.

31  Recorded cash from services rendered for cash during the month, $15,750.

 

• Record the transactions in the revenue journal and cash receipts journal.
• Total and rule the revenue and cash receipts journals.
• Indicate the method of posting the individual items and the columnar totals of the revenue and cash receipts journals in the following manner:
  • For individual items and totals to be posted to the subsidiary ledger or not to be posted, insert a check mark in the Posting Reference column or below the totals.
  • For individual items and totals to be posted to the general ledger, insert the letter “G” (as a substitute for specific account numbers) in the Posting Reference column or below the totals.

 

REVENUE JOURNAL

 

			Post.	Accts. Rec. Dr.
Date	Invoice No.	Account Debited	Ref.	Services Revenue Cr.

 

CASH RECEIPTS JOURNAL

 

			Other	Accts.
	Account	Post.	Accounts	Rec.	Cash
Date	Credited	Ref.	Cr.	Cr.	Dr.

 

 

 

ANSWER:

 

REVENUE JOURNAL

 

Date	Invoice No.	Account Debited	Post.  Ref.	Accts. Rec. Dr. Services Revenue Cr.
Mar.  5	92	Quinton Co.	√	3,250
10	93	Martin Inc.	√	4,500
31				7,750
				(G)(G)

 

CASH RECEIPTS JOURNAL

Account Date           Credited	Post. Ref.	Other Accounts      Cr.	Accts. Rec.     Cr.	Cash     Dr.
Mar.  13  Rent Revenue	G	5,000	…..	5
15  Quinton Co.	√	…..	3,250	3
19  Martin Inc.	√	…..	4,500	4
20  Thomas Co.	√	…..	5,200	5
31  Services Revenue	G	15,750	…..	15
31		20,750	12,950	33
		(√)	(G)

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

153. Down-Under, an aquatic supply store, makes the following five payments during August. Journalize them in the cash payments journal as appropriate.

• On August 2, Down-Under paid Pondmaster, Inc. with check 6420 for 6 pumps at $435.00 each. The pumps had been purchased in July on account.
• On August 10, Down-Under purchased $785.00 of office supplies from Business Systems with check 6421.
• On August 15, Down-Under paid Aqua Magic $215.00 on account with check 6422.
• On August 27, Down-Under paid an invoice for merchandise received earlier from Spindrifter, Inc. for 8 drains at $73.50 each with check 6423.
• On August 31, Down-Under purchased $65.00 of koi clay from The Natural Wonder Company by writing check 6424. (Record in Pond Supplies Expense.)

 

Cash Payments Journal					Page 17
Date	Check Number	Account Debited	Post. Ref.	Other Accounts Dr.	Accounts Payable Dr.	Cash Cr.

 

ANSWER:

Cash Payments Journal			Page 17
Date	Check Number	Account Debited	Post Ref.	Other Acct Dr.	Accounts Payable Dr.	Cash Cr.
Aug   2	6420	Pondmaster, Inc.			2,610.00	2,610.00
Aug 10	6421	Office Supplies		785.00		785.00
Aug 15	6422	Aqua Magic			215.00	215.00
Aug 27	6423	Spindrifter, Inc.			588.00	588.00
Aug 31	6424	Pond Supplies Expense		65.00		65.00

 

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

154. Voyager Electronic Services has three customers in its accounts receivable subsidiary ledger with beginning balances as follows:

Fred Yao Ming, $1,150.00 Kohl Townson, $850.00 Chandra Jahi, $1,075.00

 

Record the following transactions in a general journal. Then post to the accounts receivable account in the general ledger and to the customer accounts in the accounts receivable subsidiary ledger.

 

On June 3, Kohl Townson paid $325.00 on account.

On June 10, Chandra Jahi purchased $475.00 on account.

On June 15, Fred Yao Ming paid $395.00 on account.

On June 16, Fred Yao Ming purchased $685.00 on account. On June 23, Kohl Townson purchased $155.00 on account.

 

General Journal				Page 41
Date	Account Title	Post. Ref.	Debit	Credit

 

 

 

 

Accounts Receivable – controlling Account
Date:	Item:	Post Ref:	Debit:	Credit:	Balance:
BB					3,075.00
Accounts Receivable – Fred Yao Ming
Date:	Item:	Post Ref:	Debit:	Credit:	Balance:
BB					1,150.00
Accounts Receivable – Kohl Townson
Date:	Item:	Post Ref:	Debit:	Credit:	Balance:
BB					850.00
Accounts Receivable – Chandra Jahi
Date:	Item:	Post Ref:	Debit:	Credit:	Balance:
BB					1,075.00

 

 

 

 

 

 

ANSWER:

General Journal                         Page 41
Date	Account Title	Post. Ref.	Debit	Credit
June   3	Cash		325.00
	A/R – Kohl Townson	12/√		325.00
10	A/R – Chandra Jahi	12/√	475.00
	Sales			475.00
15	Cash		395.00
	A/R – Fred Yao Ming	12/√		395.00
16	A/R – Fred Yao Ming	12/√	685.00
	Sales			685.00
23	A/R – Kohl Townson	12/√	155.00
	Sales			155.00

 

GENERAL  JOURNAL

 

Accounts  Receivable

Date	Item	Post. Ref.	Debit	Credit	Balance Debit    Credit
June  1	Beg. balance	√			3,075.00
3		J41		325.00	2,750.00
10		J41	475.00		3,225.00
15		J41		395.00	2,830.00
16		J41	685.00		3,515.00
23		J41	155.00		3,670.00

 

F

ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER

Fred Yao Ming

Date	Item	Post. Ref.	Debit	Credit	Balance
June  1	Beg. balance	√			1,150.00
15		J41		395.00	755.00
16		J41	685.00		1,440.00

 

 

 

 

Kohl Townson

Date	Item	Post. Ref.	Debit	Credit	Balance
June  1	Beg. balance	√			850.00
3		J41		325.00	525.00
23		J41	155.00		680.00

 

Chandra Jahi

Date	Item	Post. Ref.	Debit	Credit	Balance
June  1	Beg. balance	√			1,075.00
10		J41	475.00		1,550.00

 

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.15 – Current Assets Reporting

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

155. Read each transaction and identify the appropriate journal in which it should be recorded.
156. Owner withdrew supplies.
157. Sale made on account.
158. Payment to vendor on account.
159. Payment received from customer on account.
160. Purchases on account.
161. Adjusting journal entry for supplies used.
162. Owner withdrew cash.
163. Company borrows money from bank.
164. Record monthly depreciation.
165. Close revenue accounts at month’s end.

ANSWER:                                   1. general journal

2. revenue journal
3. cash payments journal
4. cash receipts journal
5. purchases journal
6. general journal
7. cash payments journal
8. cash receipts journal
9. general journal
10. general journal

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

156. Read each transaction and identify which journal the transaction should be recorded.
157. Recorded adjusting journal entry for accrued interest.
158. Performed advising services on account.
159. Purchased office supplies on account.
160. Borrowed money for expansion project.
161. Received $500 from Tool Tech. on account.
162. Owner withdrew cash for personal use.
163. Paid monthly rent.
164. Recorded depreciation on equipment.
165. Completed Job 34aG for services provided to Beard Co.
166. Purchased inventory on account.

ANSWER:                                  1. General journal

2. Revenue journal
3. Purchases journal
4. Cash receipts journal
5. Cash receipts journal
6. cash payments journal
7. Cash payments journal
8. General journal
9. Revenue journal
10. Purchases journal

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

157. The posting references in the following revenue journal are indicated by letters. Identify each posting reference [(a) through (h)] as representing (1) a posting to a general ledger account, (2) a posting to a subsidiary ledger account, or (3) that no posting is required.

 

		REVENUE JOURNAL
			Post	Acct. Rec. Dr.
Date	Invoice No.	Account Debited	Ref.	Fees Earned Cr.
April  3	190	Hill Company	(a)	4,750
8	191	North Supply	(b)	5,025
13	192	Macon Inc.	(c)	2,100
17	193	White Products	(d)	6,000
25	194	Easton Supply	(e)	2,250
30	195	Karson Enterprises	(f)	3,750
30				23,875
				(g)  (h)

ANSWER:                                  (1)    General ledger account: (g), (h)

• Subsidiary ledger account: (a), (b), (c), (d), (e), (f)
• No posting required: —

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

158. Sunrise Coffee Shop, in an effort to streamline its accounting system, has decided to utilize a cash receipts journal. Record the following transactions for the first two weeks in March, total the columns, and include the posting A partial chart of accounts is given below. After recording the transactions, indicate if there are any additional columns you would add to this journal.

 

Cash Receipts Journal
Date	Account Credited	Post. Ref.	Other Accounts Cr.	Beverage Revenue Cr.	Food Revenue Cr.	Cash Cr.

 

 

 

March   1  Cash received for beverages, $375.

1  Cash received for food, $250.

1  Cash received for customer sales of Sunrise’s signature coffee mugs, $130

 

7  Cash received for beverages, $480 7  Cash received for food, $325

7  Cash received for customer sales of Sunrise’s signature coffee mugs, $115

10  Cash received on account from Central.com, $900

 

Chart of Accounts (Partial)​
10 Cash	41 Beverage Revenue
12 Accounts Receivable	42 Food Revenue
15 Retail Items	43 Retail Revenue

 

ANSWER:

 

​Cash Receipts Journal
Date	Description/ Account Credited	Post. Ref.	Other Cr.	Beverage Revenue Cr.	Food Revenue Cr.	Cash Dr.
Mar. 1	Cash sales	√	​	375		375
1	Cash sales	√	​		250	250
1	Retail Revenue	43	130			130
7	Cash sales	√	​	480		480
7	Cash sales	√	​		325	325
7	Retail Revenue	43	115			115
10	A/R / Central.com	12/√	900			900
			1,145	855	575	2,575
			(10)	(41)	(42)	√

Yes – Retail Revenue Cr. and possibly Accounts Receivable Cr.

DIFFICULTY:                           Moderate

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

 

159. Explain whether each of the following would usually be used in a computerized accounting system and why or why
160. special journals
161. accounts receivable control accounts
162. electronic invoice form
163. month-end postings to the general ledger

ANSWER:                                  Special journals and accounts receivable control accounts are generally not used in computerized systems. Instead, electronic forms like electronic invoice forms are used to record original transactions. Since the computer automatically posts transactions from electronic forms to the general ledger and individual accounts at the time the transactions are recorded, month-end postings are not necessary in a computerized system.

DIFFICULTY:                           Moderate

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

160. The discovery and correction of errors is important in a computerized system. What kinds of errors might occur in these systems? What type(s) of errors will be prevented in a computerized system?

ANSWER:                                  Potential errors:

1. Failing to record transactions.
2. Recording a transaction more than once.
3. Recording a transaction in incorrect accounts.
4. Entering an incorrect number in both the debit and credit parts of the

 

With a computerized system, you cannot process a transaction unless debits equal credits. Additionally, you cannot post to the wrong account, as posting occurs automatically.

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

161. Identify the three main advantages of a computerized accounting system over a manual accounting system.

ANSWER:                                  1. Simplification of the recording process by recording transactions electronically and posting to both the general and subsidiary ledgers at the same time.

 

2. Generally more accurate than manual systems.

 

3. Provides management with current balance information to support decision making since account balances are updated as transactions are entered.

DIFFICULTY:                           Easy

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-03 – 05-03 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

162. Define the meaning of the terms B2C and B2B as they relate to e-commerce.

ANSWER:                                  B2C – Business to consumer e-commerce – businesses sell directly to consumers via the Internet.

 

B2B – Business to business e-commerce – transactions are conducted between two businesses via the Internet.

DIFFICULTY:                           Easy

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms

ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

163. Describe and discuss e-commerce.

ANSWER:                                  E-commerce is the term for using the Internet to perform business transactions.  B2C e-commerce involves transactions between businesses and consumers.  B2B e-commerce involves transactions between two businesses.

 

Currently e-commerce sales are over $225 billion in retail sales, or over 5% of all retail sales.  B2C allows consumers to shop and receive goods at home and improves the speed and efficiency of transactions.

DIFFICULTY:                           Moderate

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.ACBSP.APC.03 – Business Forms

ACCT.AICPA.FN.02 – Leveraging Technology ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

164. 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.

ANSWER:                                  1. Supply chain management (SCM) – Internet applications to plan supply needs and coordinate them with suppliers.

2. Customer relationship management (CRM) – Internet applications to plan and coordinate marketing and sales efforts.
3. Product life-cycle management (PLM) – Internet applications to plan and coordinate the product development and design process.

DIFFICULTY:                           Moderate

Bloom’s: Understanding LEARNING OBJECTIVES:        ACCT.WARD.16.05-04 – 05-04 ACCREDITING STANDARDS:                                                 ACCT.ACBSP.APC.01 – Purpose

ACCT.AICPA.FN.02 – Leveraging Technology

ACCT.AICPA.FN.03 – Measurement BUSPROG: Technology

 

165. Payton Company has the following segment revenues for the two most recent years.

 

	Current Year (in millions)	Prior Year (in millions)
United States	$   825.00	$   600.00
Canada	325.50	345.50
Other countries	215.50	168.50
Total revenues	$1,366.00	$1,114.00

 

Current Year (in millions)   Prior Year (in millions) Amount Increase or (Decrease) Percent Increase or (Decrease) United States $ 825.00 $ 600.00 $225.00 37.5% Canada 325.50 345.50 (20.0) (5.8) Other countries    215.50    168.50   47.00 27.9 Total revenues $1,366.00 $1,114.00 $252.00 22.6

Prepare a horizontal analysis of the segment data.

 

 

 

ANSWER:

 

 

 

 

 

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

166. Payton Company has the following segment revenues for the two most recent fiscal years.

 

	Current Year (in millions)	Prior Year (in millions)
China	$   775.00	$   650.00
Canada	325.50	245.50
Other countries	215.50	168.50
Total revenues	$1,316.00	$1,064.00

 

Prepare a vertical analysis of the segment data.

 

 

ANSWER:

	Current Year (in millions)	Percent	Prior Year (in millions)	Percent
U.S.	$   775.00	58.9%	$      650.00	61.1%
Canada	325.50	24.7	245.50	23.1
Other countries	215.50	16.4	168.50	15.8
Total Revenues	$1,316.00	100.0%	$1,064.00	100.0%

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

167. Maximilian Corporation provided revenue disclosures for the current year by its major product segments in the notes to its financial statements as follows:

 

Major Product Segments	Current Year (in millions)
Petroleum-based products	$10,450
Industrial chemicals	9,460
Refined chemical products	8,575
Food additives	7,325
Emulsifiers	6,900
Pesticides	5,870
Salts	4,545
Wetting agents	3,215
Total revenues	$56,340

 

Prepare a vertical analysis.

 

ANSWER:

Major Product Segments	Current Year (in millions)	Percent
Petroleum-based products	$10,450	18.5%
Industrial chemicals	9,460	16.8
Refined chemical products	8,575	15.2
Food additives	7,325	13.0
Emulsifiers	6,900	12.2
Pesticides	5,870	10.4
Salts	4,545	8.1
Wetting agents	3,215	5.7
Total revenues	$56,340	100.0%*

* Difference in percentages due to rounding.

DIFFICULTY:                           Challenging Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

 

168. Eastwood Publishing reports the following segment data regarding its textbook sales:

 

Segment	Current Year	Prior Year
College textbooks	$  78,000	$  55,000
High school textbooks	129,000	115,000
Elementary school textbooks	105,000	121,000
Total textbook revenue	$312,000	$291,000

 

Perform a horizontal analysis and a vertical analysis for Eastwood Publishing Company.  Round to one decimal place.

ANSWER:                                  Horizontal Analysis:

 

 

 

 

 

Segment   Current Year   Prior Year   Amount   Percent College textbooks           $ 78,000   $  55,000   $ 23,000   41.8% textbooks   129,000   115,000   14,000   12.2% school textbooks     105,000     121,000     (16,000)   (13.2%) revenue   $312,000   $291,000   $ 21,000   7.2%

High school

 

 

Elementary

 

 

Total textbook

 

 

Vertical Analysis:

 

Segment        Current Year      Percent         Prior Year        Percent

College textbooks           $ 78,000             25.0%           $ 55,000                                      18.9%

High school

textbooks                        129,000             41.3%            115,000                                       39.5%

Elementary

school textbooks             105,000           33.7%            121,000                                                41.6%

Total textbook

revenue                         $312,000           100.0%          $291,000                                     100.0%

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.09 – Financial Statements

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

 

 

169. What is a business segment? How can business segments be analyzed?

ANSWER:                                  A business segment is a subset of a business.  Businesses may be segmented by region, product or service, or type of customer.  Segment analysis uses horizontal and vertical comparisons to analyze the segments’ contributions to the overall performance of the company.

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.03 – Business Forms

ACCT.ACBSP.APC.23 – Financial Statement Analysis ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

170. Mickey Co. does business in three regional segments: West, East, and Central. The following information is availabl

 

Segment	Current Year (in thousands)	Prior Year (in thousands)
East	$   776,000	$   664,000
West	824,000	596,000
Central	495,000	325,000
Total revenues	$2,095,000	$1,585,000

​Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.

ANSWER:

Segment	Current Year (in thousands)	Prior Year    (in thousands)	Amount Increase or (Decrease)	Percent Increase or (Decrease)
East	$   776,000	$   664,000	$112,000	16.87%
West	824,000	596,000	228,000	38.26%
Central	​  495,000	325,000	170,000	52.31%
Total revenues	$2,095,000	$1,585,000	$510,000	32.17%

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

 

171. 123 Kids TV operates in five major international segments.

 

Segment	Current Year (in millions)	Prior Year (in millions)
United States	$  9,132	$  8,528
Canada	8,248	6,391
England	4,734	4,141
China	11,700	13,299
Brazil	5,645	6,391
Total revenues	$39,459	$38,750

 

Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.

 

ANSWER:

 

Segment	Current Year (in millions)	Prior Year (in millions)	Amount  Increase or (Decrease)	Percent Increase or (Decrease)
United States	$  9,132	$ 8,528	$    604	7.08%
Canada	8,248	6,391	1,857	29.06
England	4,734	4,141	593	14.32
China	11,700	13,299	(1,599)	(12.02)
Brazil	5,645	6,391	(746)	(11.67)
Total revenues	$39,459	$38,750	$    709	1.83%

 

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

172. Connie and Jill operate Reardon’s Bakery which has the following segment revenues for the most recent two fiscal

years.

 

Prepare a vertical analysis. Round percentages to two decimal places.

 

Segment	Current Year (in thousands)	Prior Year (in thousands)
Cakes	$   691,000	$   662,000
Cupcakes	512,000	550,000
Desserts	417,000	468,000
Beverages	875,000	815,000
Total revenues	$2,495,000	$2,495,000

 

ANSWER:

 

Segment	Current Year (in thousands)	Percent	Prior Year (in thousands)	Percent
Cakes	$   691,000	27.70%	$   662,000	26.53%
Cupcakes	512,000	20.52%	550,000	22.04%
Desserts	417,000	16.71%	468,000	18.76%
Beverages	875,000	35.07%	815,000	32.67%
Total revenues	$2,495,000	100.00%	$2,495,000	100.00%

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

173. Minnie Co. does business in three segments: Theme Park, Movie Production, and Merchandise. The following information from the current year is available:

 

Segment	Current Year (in thousands)	Prior Year (in thousands)
Theme Parks	$   776,000	$   664,000
Movie Production	824,000	596,000
Merchandise	495,000	325,000
Total revenues	$2,095,000	$1,585,000

 

Prepare a vertical analysis of the segment data. Round percentages to two decimal places.

 

ANSWER:

 

Segment	Current Year (in thousands)	Percent	Prior Year (in thousands)	Percent
Theme Parks	$   776,000	37.04%	$   664,000	41.89%
Movies	824,000	39.33%	596,000	37.60%
Merchandise	495,000	23.63%	325,000	20.50%
Total revenues	$2,095,000	100.00%	$1,585,000	100.00% (rounded)

 

DIFFICULTY:                           Moderate

Bloom’s: Applying

LEARNING OBJECTIVES:        ACCT.WARD.16.05-05 – 05-05

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.23 – Financial Statement Analysis

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

 

 

 

Match the transactions below with the journal or ledger in which it would be entered.

1. purchases journal
2. revenue journal
3. cash receipts journal
4. cash payments journal
5. accounts receivable subsidiary ledger
6. accounts payable subsidiary ledger
7. general journal

 

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

174. Monthly adjustment for supplies used

ANSWER:  g

 

175. Cash receipt posting to an individual customer account

ANSWER:  e

 

176. Record sale on account to customer

ANSWER:  b

 

177. Record purchase on account from vendor

ANSWER:  a

 

178. Record payment received from customer

ANSWER:  c

 

179. Record payment made to vendor

ANSWER:  d

 

180. Cash payment posting to an individual vendor account

ANSWER:  f

 

Match the following types of journal transactions with the journal in which it would be entered.

1. cash receipts journal
2. cash payments journal
3. revenue journal

d.  purchases journal e.   general journal   DIFFICULTY:                           Easy Bloom’s: Knowledge LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02 ACCREDITING STANDARDS:  ACCT.ACBSP.APC.07 – Adjusting Entries ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic 181.  Sale on account ANSWER:  c   182.  Payment for supplies bought on account ANSWER:  b   183.  Adjusting entry ANSWER:  e   184.  Collection on account ANSWER:  a   185.  Equipment purchased on account ANSWER:  d

 

 

 

 

Match each subsidiary ledger and general ledger posting to one of the descriptions of activities (a−e).

1. Purchases on account
2. Collections from customers on account
3. Adjustment for expired insurance
4. Payments to creditors on account
5. Sales on account

 

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.18 – Special Journals

ACCT.AICPA.FN.03 – Measurement BUSPROG: Analytic

 

186. Accounts receivable subsidiary ledger / Accounts Receivable Dr.

ANSWER:  e

 

187. Accounts receivable subsidiary ledger / Accounts Receivable Cr.

ANSWER:  b

 

188. Accounts payable subsidiary ledger / Accounts Payable Cr.

ANSWER:  a

 

189. Accounts payable subsidiary ledger / Accounts Payable Dr.

ANSWER:  d

 

190. No subsidiary ledger posting

ANSWER:  c

 

 

 

 

The transactions completed by Franklin Company during January, its first month of operations, are listed below.  Assume that Franklin Company uses the following journals: cash receipts (CR), cash payments (CP), revenue (R), purchases (P), and general (G).  Assume that it uses accounts receivable and accounts payable subsidiary ledgers as well as a general ledger.  Indicate by letters which journal would be used for each transaction and whether or not the entry requires a posting to a subsidiary ledger.

1. CR, no subsidiary posting
2. CP, no subsidiary posting
3. R, no subsidiary posting
4. P, no subsidiary posting
5. G, no subsidiary posting
6. CR, subsidiary posting
7. CP, subsidiary posting
8. R, subsidiary posting
9. P, subsidiary posting
10. G, subsidiary posting

 

DIFFICULTY:                           Moderate

Bloom’s: Remembering

LEARNING OBJECTIVES:        ACCT.WARD.16.05-02 – 05-02

ACCREDITING STANDARDS:   ACCT.ACBSP.APC.06 – Recording Transactions

ACCT.ACBSP.APC.15 – Current Assets Reporting ACCT.ACBSP.APC.16 – Current Liabilities Reporting ACCT.ACBSP.APC.18 – Special Journals ACCT.AICPA.FN.03 – Measurement

BUSPROG: Analytic

 

191. Issued check for rent

ANSWER:  b

 

192. Purchased equipment on account

ANSWER:  i

 

193. Issued an invoice to a customer

ANSWER:  h

 

194. Received a check from a customer for payment on account

ANSWER:  f

 

195. Issued check for advertising expense

ANSWER:  b

196. Issued check for a payment on account

ANSWER:  g

 

197. Issued check for purchase of supplies

ANSWER:  b

 

198. Issued check for salary

ANSWER:  b

 

199. Received cash for a sale

ANSWER:  a

 

200. Purchased supplies on account

ANSWER:  i

 

201. Purchased a computer for cash

ANSWER:  b

 

202. Paid for the equipment purchased on account

ANSWER:  g

 

203. Recorded the adjustment for supplies used during the month

ANSWER:  e