Question

2) What is an AIS?
a) A system is a set of two or more interrelated components that interact to achieve a goal.
b) Systems are almost always composed of smaller subsystems, each performing a specific function supportive of the larger system.

3) AIS components
a) Not just hardware and software, also includes
i) People
ii) Procedures
iii) Data

4) Processing in accounting systems
a) Capture transaction inputs.
b) Record transaction data in journals
c) Record the debits and credits
d) Post data from journals to ledgers
e) Prepare reports

5) Journals
a) Original input captured
b) Original debit and credit

6) Types of journals
a) General journal
i) Records infrequent or non-routine transactions.
b) Specialized journals
i) Simplify the process of recording large numbers of repetitive transactions
ii) Vary according to the type of business
iii) Special journals equate to input screens in automated systems
 
7) Most common transactions (and therefore special journals) are
a) Credit sales
b) Cash receipts
c) Purchases on account
d) Cash disbursements

8) Ledgers
a) Data repository (storage and summary place)
b) Ledgers are used to summarize the financial status, including the current balance, of individual accounts.
c) T-accounts--a short hand view of a ledger account

9) The general ledger
a) Contains summary-level data for every asset, liability, equity, revenue, and expense account of an organization

10) Subsidiary ledgers (Sub-ledger)
a) A subsidiary ledger records all the detailed data for any general ledger account that has many individual sub-accounts.
b) For example, a sub-ledger that has an individual record for each customer who owes the company money supports the Accounts Receivable account in the general ledger

11) The relationship between subledgers and general ledgers is that
a) The general ledger account is called the control account
b) The sum of the subledgers must always be equal to the control account

12) Commonly used subsidiary ledgers
a) Accounts receivable for individual customers
b) Inventory for individual inventory items
c) Accounts payable for individual vendors
d) Fixed assets for individual pieces of property

13) Summary of accounting process
a) Record transactions to journals
b) Make adjusting entries
c) Post to ledgers and subledgers
d) Prepare a trial balance.
e) Make sure subledgers balance to the control account
f) Produce the income statement.
g) Produce the balance sheet.

Answer 1

(2) True Accounting information system (AIS) consists of a system is a set of two or more interrelated components that interact to achieve a goal. Systems are almost always composed of smaller subsystems, each performing a specific function supportive of the larger system.

(3) True AIS components include People, Procedures, Data, Software and Information technology infrastructure.

(4) True Processing in accounting involve all of the steps below

Capture transaction inputs.

Record transaction data in journals

Record the debits and credits

Post data from journals to ledgers

Prepare trial balance and financial reports (P&L, Balance Sheet)

(5)True Journal is the book of original entry. It records all financial transactions according to date in chronological manner. It captures original inputs and classify each entry as debit or credit according to the golden rules of accounting and nature of item transacted

(6) True General Journal is used to record infrequent or non routine transactions, such as loan payments and end-of-period adjusting and closing entries. Whereas Specialized Journal is used to record a large number of repetitive transactions such as credit sales, cash receipts, purchases, and cash disbursements. Format of specialized jounal can vary according to the need & requirements of the business.

(7) True Specialized Journal records most common transactions which includes

Credit Sales

Cash Receipts

Purchases on account

Cash disbursements

(8) False T- accounts is the graphical representation of General Ledger account. Balance Sheet are used to summarize the financial status, including the current balance, of individual accounts.

(9) False General Journal contains summary-level data for every asset, liability, equity, revenue, and expense account of an organization.

(10) True A subsidiary ledger records all the detailed data for any general ledger account that has many individual sub-accounts.

(11) True A control account is the summary account in the general ledger.

(12) True Commonly used subsidiary ledgers include Accounts receivable for individual customers, Inventory for individual inventory items, Accounts payable for individual vendors, Fixed assets for individual pieces of property and Purchases made

(13) True Summary of accounting process involves all the steps mentioned

• Record transactions to journals
• Make adjusting entries
• Post to ledgers and subsidiary ledgers
• Prepare a trial balance.
• Make sure subsidiary ledgers balance to the control account
• Produce the income statement.
• Produce the balance sheet.