Question True or False 1. An accounting information system should be cost effective; that is, the benefits of th

True or False

1. An accounting information system should be cost effective; that is, the benefits of the information must outweigh the cost of providing it.

2. An accounting system has flexibility if it is able to be used by many different companies at the same time.

3. General ledger accounting systems are software programs that integrate the various accounting functions related to sales, purchases, cash receipts and disbursements, and payroll.

4. Enterprise resource planning systems integrate all aspects of the organization, including accounting, sales, human resource management, and manufacturing.

5. A subsidiary ledger is a group of control accounts which provides information to the managers for controlling the operation of the company.

6. An accounts receivable subsidiary ledger has all the detailed information about the cash sales to individual customers.

7. The accounts payable subsidiary ledger provides detailed information about amounts owed to creditors.

8. The total of the individual account balances in the accounts receivable subsidiary ledger should agree with the total of the individual account balances in the accounts payable subsidiary ledger.

9. Control accounts are always located in the general ledger.

10. A control account and subsidiary ledger can be established for inventory.

11. A subsidiary ledger provides up-to-date information on specific account balances.

12. An advantage of using a subsidiary ledger is that one employee must post to both the subsidiary ledger and the general ledger.

13. Special journals are used to record unique transactions which do not occur very often.

14. A cash receipts journal can be used to record all transactions involving cash coming into the business, regardless of the source.

15. The cash payments journal only has one column because all entries recorded in this journal require a credit to the Cash account.

16. A cash payments journal should notbe used to record transactions which require payment by check.

17. If a transaction cannot be recorded in a special journal, it indicates that the company should adopt an electronic accounting system.

18. A debit column for Sales Returns and Allowances may be found in the cash payments journal.

19. A one-column purchases journal is used to record purchases of merchandise on account.

20. Using special journals can save time in posting because column totals are often posted rather than individual entries.

21. The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted.

22. Postings are generally made more frequently to the general ledger control accounts than to the individual accounts in the subsidiary ledgers.

23. The amounts appearing in the Inventory column of the cash payments journal are posted individually to the accounts in the accounts payable subsidiary ledger.

24. Transaction amounts recorded in the general journal are never posted to accounts in the subsidiary ledger.

25. When control and subsidiary accounts are involved, there must be a dual posting.

26. An accounting information system involves data collection, data processing, and information dissemination.

27. The basic principles of an accounting information system are cost awareness, usefulness, and fixed structure.

28. Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger at the end of an accounting period.

29. When special journals are employed, all postings must be monthly or daily but cannot be both.

30. Totaling the columns of a journal and proving the equality of the totals is called footing and cross-footing a journal.

31.Only transactions that cannot be entered in a special journal are recorded in the general journal.

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