Financial Accounting 15e Carl Warren James M Reeve Jonathan Duchac - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below True / False 1. The methods and procedures for collecting, classifying, summarizing, and reporting a business's financial and operating information are called the accounting system. …
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Financial Accounting 15e Carl Warren James M Reeve Jonathan Duchac – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
| True / False |
1. The methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information are called the accounting system.
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2. Systems analysis is the final phase in the creation or revision of an accounting system.
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3. Processing methods are the means by which the system collects, summarizes, and reports accounting information.
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4. Accounting systems evolve through a three-step process: analysis, design, and feedback.
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5. An accounting system design consists of internal controls and information processing methods.
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6. Most accounting systems evolve as the business grows and requires changes in its methods for collecting, accumulating, and reporting information.
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7. Once an accounting system has been implemented, feedback will be used to continuously analyze and improve the system.
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8. Designing a system to meet user needs is the final phase in the creation or revision of an accounting system.
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9. When specialized journals are used, the general journal is not necessary.
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10. Specialized journals are books of original entry.
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11. Transactions must first be recorded in the general journal before they can be entered in specialized journals.
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12. The format and number of specialized journals that a business uses depend upon the legal organization of the business.
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13. The basic procedure of posting from a revenue journal is to make all postings at the end of the month.
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14. The principal ledger that contains all the balance sheet and income statement accounts is the general ledger.
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15. The presence of a subsidiary ledger requires the presence of a summarizing control account in the general ledger.
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16. An account for each supplier of merchandise will appear in the accounts payable subsidiary ledger.
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17. The customers subsidiary ledger is controlled by the general ledger account entitled Accounts Payable.
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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.
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19. Even when special journals are used, purchases of store equipment on account are recorded in the general journal.
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20. A control account is used to record the details of the individual subsidiary accounts.
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21. A cash refund paid to a customer who overpaid an account receivable is recorded in the cash payments journal.
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22. Even when special journals are used, a personal withdrawal of cash is recorded in the general journal.
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23. Services provided for cash are recorded in the revenue journal.
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24. Services provided on account are recorded in the revenue journal.
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25. Sales of office supplies for cash, at cost, to a neighboring business as an accommodation are recorded in the revenue journal.
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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.
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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.
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28. Purchases journals will have an Other Accounts Cr. column.
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29. The use of subsidiary ledgers is limited to Accounts Payable and Accounts Receivable.
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30. The revenue journal is designed for the efficient recording of cash sales transactions.
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31. The Post. Ref. column of the revenue journal will reference the account number of the customer.
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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.
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33. Adjusting journal entries are recorded in a special journal.
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34. Even when special journals are used, closing journal entries are recorded in the general journal.
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35. The accounts receivable subsidiary ledger is an example of a special journal.
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36. Posting from a revenue journal to the customer account is normally done only at the end of the month.
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37. The purchase of supplies for cash would be recorded in the purchases journal.
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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.
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39. The customers ledger and the creditors ledger refer to subsidiary ledgers.
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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 Dr. column in the cash payments journal for the same period.
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41. The columns included in special journals are standardized for all businesses.
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42. Generally, subsidiary ledgers are used for general ledger accounts that consist of a large number of individual items.
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43. In a computerized accounting system, all postings happen automatically at the end of the month.
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44. In computerized accounting systems, reports may be generated at any time.
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45. Computerized accounting systems prevent all journalizing errors.
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46. Using the Internet to perform business transactions is called e-commerce.
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47. The term B2C refers to transactions conducted between two companies.
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48. E-commerce provides additional business opportunities but at the cost of reduced speed and efficiency.
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49. One way to report revenue earned by a company is to present it by the different segments of business.
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50. Businesses can only be segmented by type of customer.
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| Multiple Choice |
51. A(n) ____ system is the methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information.
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52. The phase of accounting system installation in which the information needs of people in the organization are taken into account is
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53. Which of the following is not one of the three phases needed when changing an accounting system, either in its entirety or in part?
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54. Which of the following is not part of a three-step process that a growing business uses for the evolution of its accounting system?
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55. The three phases of setting up an accounting system in correct order are
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56. The goal of systems design is to
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57. After an accounting system has been set up, what is the next step?
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58. Processing methods
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59. The means by which the accounting system collects, summarizes, and reports accounting information is called information
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60. The primary ledger containing all the balance sheet and income statement accounts is the
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61. The subsidiary ledger that includes customer account activity is called the
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62. Every controlling account must have its own
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63. At the end of the month, the total of the amount column of the revenue journal is posted as a
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64. The controlling account in the general ledger that summarizes the individual customer accounts in the subsidiary ledger is entitled
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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)
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66. A purchase of supplies for cash is recorded in the
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67. A purchase of supplies on account is recorded in the
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68. Which of the following transactions is recorded in the purchases journal?
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69. When posting column totals in the purchases journal, a credit should be posted to
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70. In which journal would an adjustment for an overcharge by a creditor be recorded?
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71. Which of the following transactions is recorded in the revenue journal?
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72. Each individual entry in the revenue journal is posted to the
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73. Which of the following is always recorded in the general journal?
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74. Which of the following is always recorded in the general journal?
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75. Which of the following is recorded in the cash receipts journal?
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76. Services performed for cash should be recorded in the
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77. Which of the following is recorded in the cash payments journal?
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78. A cash payments journal would not include a(n)
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79. In which journal is the return of supplies purchased on account recorded?
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80. A cash purchase of supplies should be recorded in the
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81. When posting the column totals of a cash payments journal, a debit should be posted to
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82. In which journal is the receipt of a promissory note from a customer on account recorded?
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83. Subsidiary ledgers
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84. Some of the more common subsidiary ledgers are
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| 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
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86. Which of the following is not considered a special journal?
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87. Which of the following journals is called an all-purpose journal?
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88. Which of the following is true about the revenue journal?
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89. The cash receipts journal will be used for
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90. An “Accounts Receivable Customer Balances” report shows
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91. A cash investment made by the owner should be recorded in the
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92. A withdrawal of cash made by the owner will be found in the
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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
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94. In which journal would adjusting entries be found?
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95. In which journal would you find cash revenues recorded?
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96. In which journal would the payment of salaries be posted?
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97. The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. Which of the following statements is false?
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98. Which of the following is not a special journal?
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99. Which of the following general ledger accounts normally has a subsidiary ledger?
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100. Which transaction is normally recorded in a special journal?
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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
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102. If a company uses special journals,
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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?
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104. When using a purchases journal,
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105. When using a revenue journal,
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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?
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107. A basic manual accounting system includes all of the following except a
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108. Which of the following statements is false?
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109. A computerized accounting system will not allow which of the following types of journalizing errors?
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110. Computerized accounting systems
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111. The total on the “Cash Receipts” report generated by QuickBooks® software at January 31 would be equal to the
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| 112. Put the following into the correct order for processing a sale on account with QuickBooks®.
A. Prepare reports. B. Record the sale by completing an electronic invoice form. C. Record collection of payment by completing a “receive payment” form.
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113. Which of the following is not an advantage of a computerized system over a manual system?
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114. Month-end postings to control accounts in a computerized accounting system are not required because
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115. Computerized accounting systems
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116. What is meant by the term B2C?
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117. In addition to B2B and B2C transactions, the Internet is commonly used in all of the following business activities except
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118. When Richard Miller purchases a fishing pole through Amazon.com, he is utilizing
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119. Which of the following is not an area where the Internet is used for business purposes?
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120. E-commerce
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121. Business may be segmented by all of the following except
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| 122. Connie’s Specialties Inc. offers exclusive interior design services. The following revenue information was determined from Connie’s records.
Using a horizontal analysis, which is correct?
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123. Segment data
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124. 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:
Using horizontal analysis, determine the percentage change in revenues for the North region.
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125. 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:
Using horizontal analysis, determine the percentage change in revenues for the South region.
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126. The following is an example of
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127. The following is an example of
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| Matching |
Match the transactions below with the journal or ledger in which it would be entered.
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128. Monthly adjustment for supplies used
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129. Cash receipt posting to an individual customer account
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130. Record sale on account to customer
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131. Record purchase on account from vendor
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132. Record payment received from customer
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133. Record payment made to vendor
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134. Cash payment posting to an individual vendor account
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Match the following types of journal transactions with the journal in which they would be entered.
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135. Sale on account
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136. Payment for supplies bought on account
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137. Adjusting entry
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138. Collection on account
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139. Equipment purchased on account
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Match each subsidiary ledger and general ledger posting to one of the descriptions of activities (a−e).
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140. Accounts receivable subsidiary ledger/Accounts Receivable Dr.
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141. Accounts receivable subsidiary ledger/Accounts Receivable Cr.
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142. Accounts payable subsidiary ledger/Accounts Payable Cr.
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143. Accounts payable subsidiary ledger/Accounts Payable Dr.
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144. No subsidiary ledger posting
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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.
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145. Issued check for rent
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146. Purchased equipment on account
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147. Issued an invoice to a customer
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148. Received a check from a customer for payment on account
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149. Issued check for advertising expense
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150. Issued check for a payment on account
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151. Issued check for purchase of supplies
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152. Issued check for salary
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153. Received cash for a sale
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154. Purchased supplies on account
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155. Purchased a computer for cash
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156. Paid for the equipment purchased on account
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157. Recorded the adjustment for supplies used during the month
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| Objective Short Answer |
| 158. Mickey Co. does business in three regional segments: West, East, and Central. The following information is available:
Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.
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| 159. Minnie Co. does business in three segments: Theme Parks, Movie Production, and Merchandise. The following information from the current year is available:
Prepare a vertical analysis of the segment data. Round percentages to two decimal places.
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| Subjective Short Answer |
160. Briefly describe the three-step process of accounting system development.
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161. Define and describe an accounting system.
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162. Utilizing the revenue journal below, journalize the following five transactions of Porshe Creations:
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163. Discuss the process of posting from a revenue journal to the subsidiary ledger and to the general ledger.
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| 164. Two transactions were posted to the following customer account.
NAME: Boogie Board Water Wear
Describe each transaction and the source of each posting.
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165. The following purchase transactions occurred during August for Backcountry Kayak Excursions.
Record these transactions in a purchases journal.
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| 166. For each of the following businesses, explain how a purchases journal might be modified for the specific business.
1. North County Medical Center 2. Tri-County Farms, Inc. 3. Prescott’s Quick Lube and Tire Store
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| 167. For each of the following businesses, explain how a revenue journal might be modified for the specific business.
1. Jon’s Auto Repair Business 2. Esquire Movie Theater 3. Beach Hut Snack Bar, Restaurant, and Lounge
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168. Explain what subsidiary ledgers are and give examples of three types of subsidiary ledgers that a business might use.
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| 169. Two transactions were posted to the following customer account:
NAME: Gen-X Products, Inc.
Describe each transaction and the source of each posting.
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| 170. Two transactions were posted to the following customer account:
NAME: Roswell Communications, Inc.
Describe each transaction and the source of each posting.
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| 171. Two transactions were posted to the following supplier’s (creditor’s) account:
NAME: Banner Computer Services, Inc.
Describe each transaction and the source of each posting.
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172. The following cash receipts journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?
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| 173. Two transactions were posted to the following supplier’s (creditor’s) account:
NAME: Xample, Inc.
Describe each transaction and the source of each posting.
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174. 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 posted.
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175. 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.
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176. The following purchases journal headings have been suggested for Tower Tree-Trimming Service Company. What problems do you see with these headings?
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177. List the four most common special journals used in accounting and describe the transactions recorded in each journal.
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| 178. Two transactions were posted to the following creditor’s account:
NAME Windsurf, Inc.
Describe each transaction and the source of each posting.
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179. 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:
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180. 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:
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181. 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.
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182. The following are selected transactions related to purchases on account and cash payments completed during April of the current year.
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183. Listed below are selected transactions completed by Ridge Company during March of the current year.
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184. Down-Under, an aquatic supply store, makes the following five payments during August. Journalize them in the cash payments journal as appropriate.
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| 185. 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. June 3 Kohl Townson paid $325.00 on account.
GENERAL LEDGER
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| 186. Read each transaction and identify the appropriate journal in which it should be recorded.
1. Owner withdrew supplies 2. Sale made on account 3. Payment to vendor on account 4. Payment received from customer on account 5. Purchases on account 6. Adjusting journal entry for supplies used 7. Owner withdrew cash 8. Company borrows money from bank 9. Record monthly depreciation 10. Close revenue accounts at month’s end
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| 187. Read each transaction and identify the journal in which the transaction should be recorded.
1. Recorded adjusting journal entry for accrued interest 2. Performed advising services on account 3. Purchased office supplies on account 4. Borrowed money for expansion project 5. Received $500 from Tool Tech. on account 6. Owner withdrew cash for personal use 7. Paid monthly rent 8. Recorded depreciation on equipment 9. Completed Job 34aG for services provided to Beard Co. 10. Purchased inventory on account
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188. 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.
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189. 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 references. 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.
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| 190. Explain whether each of the following would usually be used in a computerized accounting system and why or why not.
1. Special journals 2. Accounts receivable control accounts
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191. 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?
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192. Identify the three main advantages of a computerized accounting system over a manual accounting system.
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193. Define the meaning of the terms B2C and B2B as they relate to e-commerce.
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194. Describe and discuss e-commerce.
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195. 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.
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| 196. Payton Company has the following segment revenues for the two most recent years.
Prepare a horizontal analysis of the segment data. Round to one decimal place.
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| 197. Payton Company has the following segment revenues for the two most recent fiscal years.
Prepare a vertical analysis of the segment data. Round to one decimal place.
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198. Maximilian Corporation provided revenue disclosures for the current year by its major product segments in the notes to its financial statements as follows:
Prepare a vertical analysis. Round to one decimal place.
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199. Eastwood Publishing reports the following segment data regarding its textbook sales:
Perform a horizontal analysis and a vertical analysis for Eastwood Publishing. Round to one decimal place.
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200. What is a business segment? How can business segments be analyzed?
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| 201. 123 Kids TV operates in five major international segments.
Prepare a horizontal analysis of the segment data. Round percentages to two decimal places.
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| 202. 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.
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
