Accounting Information Systems
When technology is used in company processes, it helps reduce _____________ ____________.
What are processing errors?
Goods in transit are included in the buyer's inventory when they are on the delivery truck when the terms are FOB _________ _____________.
What is Shipping Point?
True or False: Counters of inventory should be those who are responsible for the inventory.
What is False?
When miscalculations in making change from a cashier occur, this is the account that is used to record the cash overage or shortage.
What is Cash Over and Short?
XYZ Company establishes a Petty Cash fund for $55. This is the journal entry to establish the fund.
What is debit Petty Cash $55 and credit Cash $55?
This principle requires that an accounting information system conform with a company's activities, personnel, and structure?
What is the Compatibility Principle?
A landscaping company has the following products in its ending inventory. They calculate the lower of cost or market for inventory applied separately to each product and then record a journal entry to adjust their inventory for this amount. (note, the entry amount, not the new inventory amount).
Stone - 20 units
Cost per unit: $5; Market per unit $ 6
Landscaping Pins - 500 units
Cost per unit: $1.25; Market per unit: $1.00
Rose Bushes - 40 units
Cost per unit $8; Market per unit $8.50
What is $125?
Stone: Cost 20x$5=$100; Market 20x$6=$120
Landscaping Pins: Cost 500x$1.25=$625; Market 500x$1.00=$500
Rose Bushes: Cost 40x$8=$320; Market 40x$8.50=$340
Total Cost:
$100+$625+$320=$1,045
LCM:
$100+$500+$320=$920
J/E is the difference: $1,045-$920=$125
Legally, internal control systems are required by this for publicly traded companies.
What is the Sarbanes-Oxley (SOX) Act?
This establishes procedures for verifying, approving and recording liabilities for eventual cash payments, and for issuing checks for payment of verified, approved, and recorded liabilities
What is a Voucher System?
XYZ Company decides to increase their petty cash fund from $55 to $70. This is the journal entry to increase the fund.
What is debit Petty Cash $15 and credit Cash $15?
This principle prescribes that an accounting system be able to adapt to changes in the company, including the nature of the business.
What is the Flexibility Principle?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the FIFO inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $640
Ending Inventory $120
?
Poppy Company keeps detailed accounting records to be able to detect any theft of their inventory. This is the internal control principle (1 of 7) that the company followed.
What is Maintain Adequate Records?
A & M Bank purchases insurance (bonding) policies against losses from theft by their bank tellers. This is the internal control principle (1 of 7) that the bank followed.
What is Insure Assets and Bond Key Employees?
XYZ Company makes two purchases during the month of April in their petty cash fund:
2 boxes of pens (Office Supplies) $10
Shipping for one customer order $6
The petty cashier's drawer is also short by $4.
This is the journal entry to reimburse the petty cash fund.
What is:
debit Office Expenses $10
debit Shipping Expenses $6
debit Cash Over and Short $4
credit Cash $20
?
This principle prescribes that an accounting information system have internal controls and allows managers to monitor business activities.
What is the Control Principle?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the LIFO inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $660
Ending Inventory $100
?
Brick and Steel Inc. is a large company with multiple departments. They have a purchasing department who makes approved purchases, a receiving department who checks in and records deliveries received, and an accounting department who pays invoices based on approved purchases and documented items received. This is the internal control principle (1 of 7) that the company followed.
What is Divide Responsibility for Related Transactions?
Dollar or Less Store assigns a separate cash drawer for each cashier, so that they know who is responsible for any errors or theft. This is the internal control principle (1 of 7) that the dollar store followed.
What is Establish Responsibilities?
Gems Inc. received their bank statement for the month of May.
-On April 30, the company’s Cash account has a $20,070 debit balance, but its May bank statement shows a $18,500 cash balance.
-Check Numbers 121 for $200 and 122 for $250 are outstanding checks as of May 31.
-Check Number 123 for May insurance was correctly written and cashed for $600 but was entered in the accounting records as $590 in error.
-The May statement shows the bank collected $5,000 cash on a note on behalf of the company.
- The May statement shows that a customer's $500 check for payment on their account was returned non-sufficient funds (NSF).
-The May statement shows a $10 bank service charge that has not been recorded in expenses yet.
-The cash collected for May 31 sales in the amount of $6,500 were put in the bank's deposit box after they closed for the day, so the deposit is not on the bank statement.
This is the adjusted book balance.
What is $24,550?
Book Balance $20,070
+ Proceeds from Note $5,000
- Check Amount Error $10 ($600-$590)
- NSF Returned Check $500
- Bank Service Fee $10
Adjusted Book Balance $24,550
This principle requires that an accounting information system be able to report useful, understandable, and timely information for decision making.
What is the Relevance Principle?
Based on Smith Company's activity below, this is the cost of goods sold and the ending inventory based on the Weighted Average inventory costing method.
1/1 Beginning Inventory: 100 units @ $5.00
1/16 Purchased 20 units at a cost of $5.50
1/20 Purchased 25 units at a cost of $6.00
1/23 Sold 125 units for $8.00 each
What is:
COGS $655
Ending Inventory $105
?
A produce stand uses a cash register to ring up their sales. This is the internal control principle (1 of 7) that the produce stand followed.
What is Apply Technological Controls?
A non-profit company receives several checks in the mail for donations. They have a mail clerk open the mail and document the checks received, a cashier deposit the checks, and an accountant record the deposits in the accounting system.
This is the internal control principle (1 of 7) that the non-profit followed.
What is Separate Recordkeeping from Custody of Assets?
When reconciling a bank statement, out of the list below these are the items that require a journal entry and these are what the journal entries look like:
1) Deposit was dropped off overnight and is not on the bank statement
2) The bank statement shows an $8 bank service charge that has not been recorded in expenses yet.
3) Check Number 22 for insurance was correctly written and cashed for $300 but was entered in the accounting records as $285 in error.
4) There are three outstanding checks totaling $500
What are:
2) Debit Miscellaneous Expense $8, Credit Cash $8
3) Debit Insurance Expense $15, Credit Cash $15
?
Note:
1) and 4) no entry needed - adjustment to the bank balance, NOT the book balance