Fundamental Accounting Principles

Canadian Canadian 14th Edition Larson

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 07
Student: ___________________________________________________________________________

1. Accounting information systems collect and process data about transactions and events, organize them in
useful forms, and communicate results to decision makers.
True False
2. Because accounting information systems are so accurate, decision makers in practice do not need to have
a basic knowledge of how the systems work.
True False
3. Four qualitative characteristics of information produced by an AIS are that the information must be
timely, accurate, relevant and cost-effective.
True False
4. The MIS is a subsystem of the accounting information system.
True False
5. The General Ledger system represents the primary data base in the AIS.
True False
6. Enterprise-application software is a stand-alone program not commonly used in North America.
True False
7. Accounting information systems are designed to capture information about a company's transactions and
to provide output including financial statements and special purpose reports.
True False
8. A management information system (MIS) is designed to collect and process data within an organization
for the purpose of providing users with information.
True False
9. Source documents are a group of components that collect and process raw financial data into timely,
accurate, relevant, and cost-effective information to meet the purposes of internal and external users.
True False
10. Off-the-shelf accounting software is inadequate to meet the needs of small businesses.
True False
11. Enterprise-application software packages keep the programs that manage a company's vital
operations.
True False
12. Enterprise-application software is used primarily for journal entries.
True False
13. A special journal is any journal used for recording and posting transactions of a similar type.
True False
14. A sales journal is used for recording cash sales.
True False
15. The General Journal is flexible and can be used for original, adjusting, closing, and correcting entries.
True False
16. Under the perpetual system, special journals are not required.
True False
17. When posting from special journals all debit and credit entries are entered as separate amounts.
True False
18. Most transactions for merchandising businesses fall into four groups: sales on credit, purchases on credit,
cash receipts, and cash disbursements.
True False
19. The periodic system does not record the increase in cost of goods sold and decrease in inventory at the
time of sale.
True False
20. The Purchases Journal is the same in both the periodic and perpetual systems.
True False
21. Under the perpetual system cash sales are recorded at the point of sale.
True False
22. The difference in the Sales Journal between the perpetual and periodic systems is the column to record
cost of goods sold and inventory amounts for each sale.
True False
23. A subsidiary ledger is a listing of individual accounts with a common characteristic.
True False
24. Two common subsidiary ledgers are cash receipts and cash disbursements.
True False
25. The Accounts Payable ledger is used for storing transaction data regarding individual customers.
True False
26. The Accounts Payable ledger has a controlling account in the General Ledger and a separate subsidiary
account for each creditor in the Accounts Payable ledger.
True False
27. Equipment, inventory, and investments may also need subsidiary ledgers.
True False
28. In general, subsidiary ledgers are not needed in perpetual systems because the accounting system captures
sufficient details to support analyses that decision makers need.
True False
29. A schedule of accounts receivable is a listing of all creditor accounts and account balances.
True False
30. If the total balance of the Accounts Receivable Ledger equals the total of the controlling Accounts
Receivable account, then the individual accounts are presumed to be correct.
True False
31. A Sales Journal is used to record sales of merchandise on credit.
True False
32. A columnar journal is a journal with only one column.
True False
33. Individual transactions in the Sales Journal are regularly posted to customer accounts in the Accounts
Payable ledger.
True False
34. Each transaction recorded in the Sales Journal includes a debit to Accounts Receivable and a credit to
Sales Revenue.
True False
35. The general rule for posting is that the controlling account is debited periodically for an amount equal to
the sum of the debits to the subsidiary ledger, and is credited periodically for an amount equal to the sum
of the credits to the subsidiary ledger.
True False
36. Items posted from the General Journal carry the initial P.
True False
37. Three issues involving the Sales Journal include: (1) recording sales taxes (2) recording sales returns and
allowances and (3) recording purchase discounts.
True False
38. A Sales Journal is used to record cash sales.
True False
39. Account balances in the General Ledger and the subsidiary ledgers are tested for accuracy after posting is
complete.
True False
40. To check for accuracy after posting: first a trial balance is completed, then the subsidiary ledgers are
tested by preparing a schedule of the controlling account.
True False
41. The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added to
them to facilitate recording.
True False
42. The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added
to them to facilitate recording. In the same manner GST receivable and PST receivable columns may be
added to the Purchases Journal and the Cash Disbursements Journal.
True False
43. Accounting information systems:
A. Collect and process data from events and transactions.
B. Organize data in useful forms.
C. Communicate information to decision makers.
D. Both collect and process data from events and transactions and organize data in useful forms.
E. All of these answers are correct.
44. Accounting information system components include:
A. People.
B. Input data.
C. Software.
D. Hardware.
E. All of these answers are correct.
45. The basic components of an accounting system include:
A. Source documents.
B. Input devices.
C. Information processors.
D. Information storage.
E. All of these answers are correct.
46. An MIS is designed to:
A. Ensure reliable financial reports.
B. Safeguard company assets.
C. Ensure full disclosure.
D. Both ensure reliable financial reports and safeguard company assets.
E. Collect and process data.
47. The sale of inventory may:
A. decrease inventory.
B. impact the Sales Journal.
C. create accounts receivable.
D. initiate billing.
E. All of these answers are correct.
48. An example of a specialty component of an AIS is:
A. Subsidiary ledger.
B. Sales Journal.
C. Property, plant and equipment.
D. Cheque Register.
E. Voucher.
49. The three primary components of accounting information systems are:
A. Relevance, compatibility, and flexibility.
B. Compatibility, flexibility, and cost-benefit.
C. Compatibility, flexibility, and safety.
D. Compatibility, timeliness, and cost-benefit.
E. Accounts payable, accounts receivable, and payroll.
50. Source documents:
A. Are input devices.
B. Provide basic information processed by an accounting system.
C. Can be electronic files.
D. Both provide basic information processed by an accounting system and can be electronic files.
E. All of these answers are correct.
51. Special journals include:
A. Sales journal.
B. Cash receipts journal.
C. Purchases journal.
D. Cash disbursements journal.
E. All of these answers are correct.
52. The ledger that contains the financial statement accounts of a business is the:
A. General Ledger.
B. General Journal.
C. Special Ledger.
D. Special Journal.
E. Column balance ledger.
53. The Sales Journal is used for:
A. Recording credit purchases.
B. Recording credit sales.
C. Recording cash sales.
D. Recording cash purchases.
E. Recording both credit sales and cash sales.
54. The Purchases Journal is used for:
A. Recording credit purchases.
B. Recording credit sales.
C. Recording cash sales.
D. Recording cash purchases.
E. Recording both credit purchases and credit sales.
55. The General Journal is used for:
A. Recording adjusting entries.
B. Posting transactions to special journals.
C. Accumulating debits and credits.
D. Collecting detailed listings of amounts.
E. Recording both adjusting entries and posting transactions to special journals.
56. A book of original entry that is designed and used for recording only a specified type of transaction is
called a:
A. Schedule.
B. Columnar ledger.
C. Special journal.
D. General journal.
E. Subsidiary ledger.
57. Most of the transactions of a merchandising company fall into four groups, including all of the following
except:
A. Sales on credit.
B. Sales returns and allowances.
C. Purchases on credit.
D. Cash receipts.
E. Cash disbursements.
58. A company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash Disbursements
Journal, and a General Journal. A sales return for credit on account would be recorded in the:
A. Sales Journal.
B. General Journal.
C. Cash Receipts Journal.
D. Accounts Receivable Ledger.
E. Cash Disbursements Journal.
59. One difference in the Sales Journal between the perpetual and periodic systems is:
A. The column to record cost of goods sold and inventory amounts sold.
B. The addition of a sales tax payable column.
C. The deletion of a sales tax payable column.
D. The column to record cost of goods sold and inventory amounts sold and the deletion of a sales tax
payable column.
E. The column to record cost of goods sold and inventory amounts sold and the addition of a sales tax
payable column.
60. The special journals under the perpetual inventory system:
A. Include an additional sales tax payable journal.
B. Include the sales journal, cash receipts journal, purchases journal, and cash disbursements journal.
C. Include an additional inventory journal.
D. Include an additional cost of goods sold journal.
E. Include both an additional inventory journal and an additional cost of goods sold journal.
61. A subsidiary ledger:
A. Includes transactions not covered by special journals.
B. Is a listing of all of the accounts of a business.
C. Is a listing of individual accounts with a common characteristic.
D. Is a listing of all accounts with balances.
E. Is a listing of all special journals.
62. A subsidiary ledger that contains a separate account for each party that grants credit on account to the
business is called a(n):
A. Controlling account.
B. Accounts Receivable Ledger.
C. Accounts Payable Ledger.
D. Merchandise Inventory Ledger.
E. Accounts Payable.
63. An Accounts Receivable ledger is:
A. A subsidiary ledger that contains an account for each credit customer.
B A list of the balances of all the accounts in the Accounts Receivable ledger that is added to show the
. total amount of accounts receivable outstanding.
C. A book of original entry that is designed and used for recording only a specified type of transaction.
D. The ledger that contains the financial statement accounts of a business.
E. A subsidiary ledger that contains a separate account for each party that grants credit on account to the
entity.
64. The use of an Accounts Payable controlling account:
A. Reduces the number of accounts in the subsidiary ledger.
B. Reduces the total number of accounts maintained.
C. Reduces the number of entries in the general journal.
D. Reduces the number of accounts in the general ledger.
E. Increases the number of columns in the journals.
65. The Accounts Receivable ledger is:
A. used for recording credit sales.
B. used for storing transaction data for individual customers.
C. used for storing transaction data for individual creditors.
D. used for recording cash receipts from customers.
E. also the controlling account.
66. The ledger that contains the financial statement accounts of a business is the:
A. Columnar journal.
B. Accounts payable ledger.
C. General journal.
D. General ledger.
E. Subsidiary ledger.
67. The Accounts Payable account in the General Ledger is:
A. The account that controls the subsidiary accounts payable ledger.
B. The account that controls the purchases journal.
C. The subsidiary account to the purchases journal.
D. Part of a special journal.
E. Part of a subsidiary ledger.
68. When a Sales Journal's sales amount column is totalled at the end of the month, the total is:
A. Debited to Sales and credited to Accounts Receivable.
B. Debited to Accounts Receivable and credited to Cash.
C. Debited to Cash and credited to Accounts Receivable.
D. Debited to Accounts Receivable and credited to Sales.
E. Debited to Cash and credited to Sales.
69. When a business has more than one credit customer, a separate account receivable for each customer
must be designed to show all of the following except:
A. How much each customer has paid.
B. How much each customer has purchased.
C. How much sales tax each customer has paid.
D. How much remains to be collected from each customer.
E. All of these should be included.
70. The general rule for posting to a subsidiary ledger and its controlling account is:
A.The controlling account is debited periodically for an amount or amounts equal to the sum of the debits
to the subsidiary ledger.
B.The controlling account is credited periodically for an amount or amounts equal to the sum of the
credits to the subsidiary ledger.
C. A trial balance ledger.
D The controlling account is both debited and credited periodically for an amount or amounts equal to the
. sum of the debits or credits to the subsidiary ledger.
E. All of these answers are correct.
71. A list of the balances of all the accounts in the Accounts Receivable Ledger that is added to show the
total of accounts receivable outstanding is called a:
A. Schedule of accounts payable.
B. Controlling account.
C. Schedule of accounts receivable.
D. Subsidiary ledger.
E. Special journal.
72. An Accounts Payable subledger is:
A. A subsidiary ledger that contains an account for each supplier that grants credit to the company.
B A list of the balances of all the accounts in the Accounts Receivable ledger that is added to show the
. total amount of accounts receivable outstanding.
C. A book of original entry that is designed and used for recording only a specified type of transaction.
D. The ledger that contains the financial statement accounts of a business.
E. A subsidiary ledger that contains a separate account for each customer that grants credit to the
company.
73. After posting is completed, there may be an error if:
A. The sum of the customer account balances does not equal the total in the sales journal.
B. The sum of the accounts receivable ledger does not equal the balance in the sales account.
C. The sum of the customer account balances does not equal the accounts receivable controlling account
balance.
D. The balance in the sales journal does not equal the accounts receivable controlling account balance.
E. The sum of the accounts receivable ledger does not equal the balance in the sales journal.
74. A bookkeeper using a Purchases Journal recorded new store supplies purchased on account. The
subledger that would be impacted as a result of this transaction is the:
A. Accounts payable subledger.
B. Accounts receivable subledger.
C. Merchandise inventory subledger.
D. Sales subledger.
E. Cash receipts journal.
75. List the five subsystems within a management information system (MIS).
76. Define an accounting information system (AIS).

77. What are the primary components within an accounting information system?

78. Outdoors Unlimited has the following transactions. Match each transaction with the appropriate journal.
(a) Sales Journal
(b) Purchases Journal
(c) Cash Receipts Journal
(d) Cash Disbursements Journal
(e) General Journal
______ (1) Borrowed $5,000 from the bank.
______ (2) A customer returned a $250 item purchased on account.
______ (3) Purchased merchandise on account, $2,700.
______ (4) Purchased a display rack on account for $4,700.
______ (5) Paid $65,000 in wages and salaries.
______ (6) Paid a utility bill for $3,400.
______ (7) Purchased $1,590 of store supplies on account.
______ (8) Recorded depreciation on store equipment of $4,000.
______ (9) Returned defective inventory purchased on account, $2,900.
______ (10) Recorded cash sales of $14,700.
79. Outdoors Unlimited has the following transactions. For each transaction, indicate the appropriate journal.
(a) Sales Journal
(b) Purchases Journal
(c) Cash Receipts Journal
(d) Cash Disbursements Journal
(e) General Journal
______ (1) Purchased merchandise for cash.
______ (2) Sold merchandise for cash.
______ (3) Purchased merchandise on credit.
______ (4) Sold merchandise on credit.
______ (5) Paid the utility bill.
______ (6) Owner invested more cash in the business.
______ (7) Recorded depreciation for the period.
______ (8) Borrowed money from the bank and received cash.
______ (9) Bought store supplies for cash.
______ (10) Customer paid off an account receivable.

80. Explain what is meant by footing and cross footing.

81. Explain the goals and uses of special journals.

82. Discuss the differences in the special journals for a perpetual versus a periodic inventory system.
83. Explain the use of controlling accounts and subsidiary ledgers.

84. Describe the posting process for special journals.

Dina Company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash Disbursements
Journal, and a General Journal, and a perpetual inventory system. The following transactions occurred
during the month of December:

85. Prepare a Sales Journal for Dina Company and journalize the appropriate transactions.

86. Prepare a Cash Disbursements Journal for Dina Company and journalize the appropriate transactions.
87. Princess Company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash
Disbursements Journal, a General Journal and a perpetual inventory system.
The following transactions were completed by Princess Company during the month of October:

Required:
(a) Record the appropriate transactions in the General Journal.
(b) For the transactions not recorded in the General Journal, indicate the correct special journal that would
be used.

88. Dunst Adventure Co. uses special journals to record its transactions and a perpetual inventory system.
Shown below are the purchase and cash disbursement transactions for May:

Record the above transactions in the following journals.

89. (1) What is the name of the journal illustrated below?
(2) Write an explanation for each entry.

The following transactions were completed by Augsburg Company during the month of May:

90. Prepare a Cash Receipts Journal for Augsburg and record the appropriate transactions, assuming a
perpetual inventory system is used.
91. Trekking Company uses a perpetual inventory system and four special journals: Purchases, Sales, Cash
Receipts, and Cash Disbursements. The following transactions were incurred during August:

Record the above transactions in the appropriate journals that follow. Ignore any transactions that should
not be posted to the journals provided.
The following transactions were completed by Augsburg Company during the month of May. The
company uses a perpetual inventory system.

92. Prepare a multi-column Purchases Journal for Augsburg and record the appropriate transactions.
Complete the process and prepare a schedule of accounts payable.

93. Explain how the balances in the subsidiary accounts are tested for accuracy.
94. The Forty-Niner Company uses a periodic system and records its transactions and other events in four
special journals and a general journal. The money columns of these journals are numbered as follows:

Show how each of the following transactions would be recorded in the above set of accounting
journals by inserting the number(s) of the columns in which the debit(s) would appear in the column
labeled "Debits" below and by inserting the number(s) of the columns in which the credits would appear
in the column labeled "Credits" below.
95. Abercrombie Company uses a periodic inventory system and four special journals: Purchases, Sales, Cash
Receipts, and Cash Disbursements. The following transactions were incurred during August:

Record the above transactions in the appropriate journals below. Ignore transactions that should not be
posted to the journals provided.
96. Outdoors Unlimited uses special journals to record its daily transactions. Shown below is a Cash Receipts
Journal and selected ledger accounts. Post the Cash Receipts Journal to the appropriate accounts.
97. Heidi Company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash Disbursements
Journal, and a General Journal. The following are the totals from the special journals for the month ended
July 31:

Required:
Post the appropriate amounts to the Accounts Receivable and Accounts Payable controlling T-
accounts.

98. __________________________ consist of people, records, methods, and equipment.

________________________________________
99. The _____________________ provide the basic information processed by an AIS.
________________________________________
100.A(n) __________________ journal is used in recording and posting transactions of similar type.
________________________________________
101.The difference in the Sales Journal between the perpetual and periodic systems is the column to record
___________________ and ________________ for each sale.
________________________________________
102.Identify two subledgers.
________________________________________
103.Using __________________ ledgers removes unnecessary details from the general ledger.
________________________________________
104.Individual transactions in the Sales Journal are posted regularly to customers' accounts in the
______________________.
________________________________________
105.When a Cash Disbursements Journal has a column for cheque numbers, it is sometimes called a(n)
_____________.
________________________________________
106.Match the following terms with the appropriate definition.
1. A list of the balances of all the accounts in the Accounts Acc
Receivable Ledger that is totaled to show the total amount of ounting_
accounts receivable outstanding. information_
system _
_
2. The special journal that is used to record all receipts of cash. Cash
receipts_
journal _
_
_
3. The people, records, methods, and equipment that collect Cash
and process data from transactions and events, organize them in disburseme_
useful forms, and communicate results to decision makers. nts journal _
_
_
4. The special journal that is used to record all payments of Schedule
cash. of accounts_
receivable _
_
_
107.Match the following terms with the appropriate definition.
1. A journal that is used to record all payments of cash. Cash _
receipts__
journal _
2. Any journal that is used for recording and posting Purchases _
transactions of a similar type. journal __
_
3. A general ledger account the balance of which (after Sales _
posting) equals the sum of the balances of the accounts in a journal __
related subsidiary ledger. _
4. A journal that is used to record all purchases on credit. Special _
journal __
_
5. A journal used to record sales of merchandise on credit. Controllin _
g account __
_
6. The special journal that is used to record all receipts of Cash _
cash. disbursement__
s journal _
108.Match the journals with the appropriate statement below:
1. Recording cash payments Cash Disbursements ____
2. Recording credit sales General ____
3. Recording cash receipts Cash Receipts ____
4. Recording credit purchases Sales ____
5. For transactions not in special journals Purchases ____
 07 Key
1. Accounting information systems collect and process data about transactions and events, organize them
in useful forms, and communicate results to decision makers.
TRUE
Difficulty: Easy
Larson - Chapter 07 #1
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
2. Because accounting information systems are so accurate, decision makers in practice do not need to
have a basic knowledge of how the systems work.
FALSE
Difficulty: Easy
Larson - Chapter 07 #2
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
3. Four qualitative characteristics of information produced by an AIS are that the information must be
timely, accurate, relevant and cost-effective.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #3
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
4. The MIS is a subsystem of the accounting information system.
FALSE
Difficulty: Hard
Larson - Chapter 07 #4
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
5. The General Ledger system represents the primary data base in the AIS.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #5
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
6. Enterprise-application software is a stand-alone program not commonly used in North America.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #6
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
7. Accounting information systems are designed to capture information about a company's transactions
and to provide output including financial statements and special purpose reports.
TRUE
Difficulty: Easy
Larson - Chapter 07 #7
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
8. A management information system (MIS) is designed to collect and process data within an
organization for the purpose of providing users with information.
TRUE
Difficulty: Easy
Larson - Chapter 07 #8
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
9. Source documents are a group of components that collect and process raw financial data into timely,
accurate, relevant, and cost-effective information to meet the purposes of internal and external
users.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #9
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
10. Off-the-shelf accounting software is inadequate to meet the needs of small businesses.
FALSE
Difficulty: Easy
Larson - Chapter 07 #10
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
11. Enterprise-application software packages keep the programs that manage a company's vital
operations.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #11
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
12. Enterprise-application software is used primarily for journal entries.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #12
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
13. A special journal is any journal used for recording and posting transactions of a similar type.
TRUE
Difficulty: Easy
Larson - Chapter 07 #13
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
14. A sales journal is used for recording cash sales.
FALSE
Difficulty: Easy
Larson - Chapter 07 #14
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
15. The General Journal is flexible and can be used for original, adjusting, closing, and correcting
entries.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #15
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
16. Under the perpetual system, special journals are not required.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #16
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
17. When posting from special journals all debit and credit entries are entered as separate amounts.
FALSE
Difficulty: Hard
Larson - Chapter 07 #17
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
18. Most transactions for merchandising businesses fall into four groups: sales on credit, purchases on
credit, cash receipts, and cash disbursements.
TRUE
Difficulty: Hard
Larson - Chapter 07 #18
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
19. The periodic system does not record the increase in cost of goods sold and decrease in inventory at the
time of sale.
TRUE
Difficulty: Easy
Larson - Chapter 07 #19
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
20. The Purchases Journal is the same in both the periodic and perpetual systems.
FALSE
Difficulty: Easy
Larson - Chapter 07 #20
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
21. Under the perpetual system cash sales are recorded at the point of sale.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #21
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
22. The difference in the Sales Journal between the perpetual and periodic systems is the column to record
cost of goods sold and inventory amounts for each sale.
TRUE
Difficulty: Hard
Larson - Chapter 07 #22
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
23. A subsidiary ledger is a listing of individual accounts with a common characteristic.
TRUE
Difficulty: Easy
Larson - Chapter 07 #23
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
24. Two common subsidiary ledgers are cash receipts and cash disbursements.
FALSE
Difficulty: Easy
Larson - Chapter 07 #24
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
25. The Accounts Payable ledger is used for storing transaction data regarding individual customers.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #25
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
26. The Accounts Payable ledger has a controlling account in the General Ledger and a separate
subsidiary account for each creditor in the Accounts Payable ledger.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #26
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
27. Equipment, inventory, and investments may also need subsidiary ledgers.
TRUE
Difficulty: Hard
Larson - Chapter 07 #27
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
28. In general, subsidiary ledgers are not needed in perpetual systems because the accounting system
captures sufficient details to support analyses that decision makers need.
FALSE
Difficulty: Hard
Larson - Chapter 07 #28
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
29. A schedule of accounts receivable is a listing of all creditor accounts and account balances.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #29
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
30. If the total balance of the Accounts Receivable Ledger equals the total of the controlling Accounts
Receivable account, then the individual accounts are presumed to be correct.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #30
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
31. A Sales Journal is used to record sales of merchandise on credit.
TRUE
Difficulty: Easy
Larson - Chapter 07 #31
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
32. A columnar journal is a journal with only one column.
FALSE
Difficulty: Easy
Larson - Chapter 07 #32
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
33. Individual transactions in the Sales Journal are regularly posted to customer accounts in the Accounts
Payable ledger.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #33
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
34. Each transaction recorded in the Sales Journal includes a debit to Accounts Receivable and a credit to
Sales Revenue.
TRUE
Difficulty: Moderate
Larson - Chapter 07 #34
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
35. The general rule for posting is that the controlling account is debited periodically for an amount equal
to the sum of the debits to the subsidiary ledger, and is credited periodically for an amount equal to the
sum of the credits to the subsidiary ledger.
TRUE
Difficulty: Hard
Larson - Chapter 07 #35
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
36. Items posted from the General Journal carry the initial P.
FALSE
Difficulty: Easy
Larson - Chapter 07 #36
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
37. Three issues involving the Sales Journal include: (1) recording sales taxes (2) recording sales returns
and allowances and (3) recording purchase discounts.
FALSE
Difficulty: Easy
Larson - Chapter 07 #37
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
38. A Sales Journal is used to record cash sales.
FALSE
Difficulty: Easy
Larson - Chapter 07 #38
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
39. Account balances in the General Ledger and the subsidiary ledgers are tested for accuracy after
posting is complete.
TRUE
Difficulty: Easy
Larson - Chapter 07 #39
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
40. To check for accuracy after posting: first a trial balance is completed, then the subsidiary ledgers are
tested by preparing a schedule of the controlling account.
FALSE
Difficulty: Hard
Larson - Chapter 07 #40
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
41. The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added
to them to facilitate recording.
TRUE
Difficulty: Easy
Larson - Chapter 07 #41
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
42. The Sales Journal and Cash Receipts Journal may have GST payable and PST payable columns added
to them to facilitate recording. In the same manner GST receivable and PST receivable columns may
be added to the Purchases Journal and the Cash Disbursements Journal.
FALSE
Difficulty: Moderate
Larson - Chapter 07 #42
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
43. Accounting information systems:
A. Collect and process data from events and transactions.
B. Organize data in useful forms.
C. Communicate information to decision makers.
D. Both collect and process data from events and transactions and organize data in useful forms.
E. All of these answers are correct.
Difficulty: Easy
Larson - Chapter 07 #43
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
44. Accounting information system components include:
A. People.
B. Input data.
C. Software.
D. Hardware.
E. All of these answers are correct.
Difficulty: Easy
Larson - Chapter 07 #44
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
45. The basic components of an accounting system include:
A. Source documents.
B. Input devices.
C. Information processors.
D. Information storage.
E. All of these answers are correct.
Difficulty: Easy
Larson - Chapter 07 #45
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
46. An MIS is designed to:
A. Ensure reliable financial reports.
B. Safeguard company assets.
C. Ensure full disclosure.
D. Both ensure reliable financial reports and safeguard company assets.
E. Collect and process data.
Difficulty: Hard
Larson - Chapter 07 #46
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
47. The sale of inventory may:
A. decrease inventory.
B. impact the Sales Journal.
C. create accounts receivable.
D. initiate billing.
E. All of these answers are correct.
Difficulty: Moderate
Larson - Chapter 07 #47
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
48. An example of a specialty component of an AIS is:
A. Subsidiary ledger.
B. Sales Journal.
C. Property, plant and equipment.
D. Cheque Register.
E. Voucher.
Difficulty: Moderate
Larson - Chapter 07 #48
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
49. The three primary components of accounting information systems are:
A. Relevance, compatibility, and flexibility.
B. Compatibility, flexibility, and cost-benefit.
C. Compatibility, flexibility, and safety.
D. Compatibility, timeliness, and cost-benefit.
E. Accounts payable, accounts receivable, and payroll.
Difficulty: Easy
Larson - Chapter 07 #49
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
50. Source documents:
A. Are input devices.
B. Provide basic information processed by an accounting system.
C. Can be electronic files.
D. Both provide basic information processed by an accounting system and can be electronic files.
E. All of these answers are correct.
Difficulty: Moderate
Larson - Chapter 07 #50
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
51. Special journals include:
A. Sales journal.
B. Cash receipts journal.
C. Purchases journal.
D. Cash disbursements journal.
E. All of these answers are correct.
Difficulty: Easy
Larson - Chapter 07 #51
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
52. The ledger that contains the financial statement accounts of a business is the:
A. General Ledger.
B. General Journal.
C. Special Ledger.
D. Special Journal.
E. Column balance ledger.
Difficulty: Easy
Larson - Chapter 07 #52
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
53. The Sales Journal is used for:
A. Recording credit purchases.
B. Recording credit sales.
C. Recording cash sales.
D. Recording cash purchases.
E. Recording both credit sales and cash sales.
Difficulty: Moderate
Larson - Chapter 07 #53
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
54. The Purchases Journal is used for:
A. Recording credit purchases.
B. Recording credit sales.
C. Recording cash sales.
D. Recording cash purchases.
E. Recording both credit purchases and credit sales.
Difficulty: Moderate
Larson - Chapter 07 #54
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
55. The General Journal is used for:
A. Recording adjusting entries.
B. Posting transactions to special journals.
C. Accumulating debits and credits.
D. Collecting detailed listings of amounts.
E. Recording both adjusting entries and posting transactions to special journals.
Difficulty: Hard
Larson - Chapter 07 #55
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
56. A book of original entry that is designed and used for recording only a specified type of transaction is
called a:
A. Schedule.
B. Columnar ledger.
C. Special journal.
D. General journal.
E. Subsidiary ledger.
Difficulty: Easy
Larson - Chapter 07 #56
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
57. Most of the transactions of a merchandising company fall into four groups, including all of the
following except:
A. Sales on credit.
B. Sales returns and allowances.
C. Purchases on credit.
D. Cash receipts.
E. Cash disbursements.
Difficulty: Moderate
Larson - Chapter 07 #57
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
58. A company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash Disbursements
Journal, and a General Journal. A sales return for credit on account would be recorded in the:
A. Sales Journal.
B. General Journal.
C. Cash Receipts Journal.
D. Accounts Receivable Ledger.
E. Cash Disbursements Journal.
Difficulty: Moderate
Larson - Chapter 07 #58
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
59. One difference in the Sales Journal between the perpetual and periodic systems is:
A. The column to record cost of goods sold and inventory amounts sold.
B. The addition of a sales tax payable column.
C. The deletion of a sales tax payable column.
D. The column to record cost of goods sold and inventory amounts sold and the deletion of a sales tax
payable column.
E. The column to record cost of goods sold and inventory amounts sold and the addition of a sales tax
payable column.
Difficulty: Moderate
Larson - Chapter 07 #59
Learning Objective: 07-04 Journalize and post transactions using special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
60. The special journals under the perpetual inventory system:
A. Include an additional sales tax payable journal.
B. Include the sales journal, cash receipts journal, purchases journal, and cash disbursements journal.
C. Include an additional inventory journal.
D. Include an additional cost of goods sold journal.
E. Include both an additional inventory journal and an additional cost of goods sold journal.
Difficulty: Moderate
Larson - Chapter 07 #60
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
61. A subsidiary ledger:
A. Includes transactions not covered by special journals.
B. Is a listing of all of the accounts of a business.
C. Is a listing of individual accounts with a common characteristic.
D. Is a listing of all accounts with balances.
E. Is a listing of all special journals.
Difficulty: Easy
Larson - Chapter 07 #61
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
62. A subsidiary ledger that contains a separate account for each party that grants credit on account to the
business is called a(n):
A. Controlling account.
B. Accounts Receivable Ledger.
C. Accounts Payable Ledger.
D. Merchandise Inventory Ledger.
E. Accounts Payable.
Difficulty: Easy
Larson - Chapter 07 #62
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
63. An Accounts Receivable ledger is:
A. A subsidiary ledger that contains an account for each credit customer.
B A list of the balances of all the accounts in the Accounts Receivable ledger that is added to show the
. total amount of accounts receivable outstanding.
C. A book of original entry that is designed and used for recording only a specified type of
transaction.
D. The ledger that contains the financial statement accounts of a business.
E. A subsidiary ledger that contains a separate account for each party that grants credit on account to
the entity.
Difficulty: Moderate
Larson - Chapter 07 #63
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
64. The use of an Accounts Payable controlling account:
A. Reduces the number of accounts in the subsidiary ledger.
B. Reduces the total number of accounts maintained.
C. Reduces the number of entries in the general journal.
D. Reduces the number of accounts in the general ledger.
E. Increases the number of columns in the journals.
Difficulty: Moderate
Larson - Chapter 07 #64
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
65. The Accounts Receivable ledger is:
A. used for recording credit sales.
B. used for storing transaction data for individual customers.
C. used for storing transaction data for individual creditors.
D. used for recording cash receipts from customers.
E. also the controlling account.
Difficulty: Hard
Larson - Chapter 07 #65
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
66. The ledger that contains the financial statement accounts of a business is the:
A. Columnar journal.
B. Accounts payable ledger.
C. General journal.
D. General ledger.
E. Subsidiary ledger.
Difficulty: Easy
Larson - Chapter 07 #66
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
67. The Accounts Payable account in the General Ledger is:
A. The account that controls the subsidiary accounts payable ledger.
B. The account that controls the purchases journal.
C. The subsidiary account to the purchases journal.
D. Part of a special journal.
E. Part of a subsidiary ledger.
Difficulty: Moderate
Larson - Chapter 07 #67
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
68. When a Sales Journal's sales amount column is totalled at the end of the month, the total is:
A. Debited to Sales and credited to Accounts Receivable.
B. Debited to Accounts Receivable and credited to Cash.
C. Debited to Cash and credited to Accounts Receivable.
D. Debited to Accounts Receivable and credited to Sales.
E. Debited to Cash and credited to Sales.
Difficulty: Moderate
Larson - Chapter 07 #68
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
69. When a business has more than one credit customer, a separate account receivable for each customer
must be designed to show all of the following except:
A. How much each customer has paid.
B. How much each customer has purchased.
C. How much sales tax each customer has paid.
D. How much remains to be collected from each customer.
E. All of these should be included.
Difficulty: Hard
Larson - Chapter 07 #69
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
70. The general rule for posting to a subsidiary ledger and its controlling account is:
A. The controlling account is debited periodically for an amount or amounts equal to the sum of the
debits to the subsidiary ledger.
B. The controlling account is credited periodically for an amount or amounts equal to the sum of the
credits to the subsidiary ledger.
C. A trial balance ledger.
D The controlling account is both debited and credited periodically for an amount or amounts equal to
. the sum of the debits or credits to the subsidiary ledger.
E. All of these answers are correct.
Difficulty: Hard
Larson - Chapter 07 #70
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
71. A list of the balances of all the accounts in the Accounts Receivable Ledger that is added to show the
total of accounts receivable outstanding is called a:
A. Schedule of accounts payable.
B. Controlling account.
C. Schedule of accounts receivable.
D. Subsidiary ledger.
E. Special journal.
Difficulty: Easy
Larson - Chapter 07 #71
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
72. An Accounts Payable subledger is:
A. A subsidiary ledger that contains an account for each supplier that grants credit to the company.
B A list of the balances of all the accounts in the Accounts Receivable ledger that is added to show the
. total amount of accounts receivable outstanding.
C. A book of original entry that is designed and used for recording only a specified type of
transaction.
D. The ledger that contains the financial statement accounts of a business.
E. A subsidiary ledger that contains a separate account for each customer that grants credit to the
company.
Difficulty: Easy
Larson - Chapter 07 #72
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
73. After posting is completed, there may be an error if:
A. The sum of the customer account balances does not equal the total in the sales journal.
B. The sum of the accounts receivable ledger does not equal the balance in the sales account.
C. The sum of the customer account balances does not equal the accounts receivable controlling
account balance.
D. The balance in the sales journal does not equal the accounts receivable controlling account balance.
E. The sum of the accounts receivable ledger does not equal the balance in the sales journal.
Difficulty: Hard
Larson - Chapter 07 #73
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
74. A bookkeeper using a Purchases Journal recorded new store supplies purchased on account. The
subledger that would be impacted as a result of this transaction is the:
A. Accounts payable subledger.
B. Accounts receivable subledger.
C. Merchandise inventory subledger.
D. Sales subledger.
E. Cash receipts journal.
Difficulty: Hard
Larson - Chapter 07 #74
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
75. List the five subsystems within a management information system (MIS).

1. Sales and marketing

2. Production
3. Finance
4. Human resources
5. Accounting

Difficulty: Easy
Larson - Chapter 07 #75
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
76. Define an accounting information system (AIS).

An accounting information system is a group of components that collects and processes raw financial
data into timely, accurate, relevant, and cost-effective information to meet the purposes of internal and
external users.

Difficulty: Moderate
Larson - Chapter 07 #76
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
77. What are the primary components within an accounting information system?

1. Accounts payable
2. Accounts receivable
3. Payroll
4. Other, specialty components as required (e.g. Property, plant and equipment)

Difficulty: Moderate
Larson - Chapter 07 #77
Learning Objective: 07-01 Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the
components of an AIS.
Type: Knowledge
78. Outdoors Unlimited has the following transactions. Match each transaction with the appropriate
journal.
(a) Sales Journal
(b) Purchases Journal
(c) Cash Receipts Journal
(d) Cash Disbursements Journal
(e) General Journal
______ (1) Borrowed $5,000 from the bank.
______ (2) A customer returned a $250 item purchased on account.
______ (3) Purchased merchandise on account, $2,700.
______ (4) Purchased a display rack on account for $4,700.
______ (5) Paid $65,000 in wages and salaries.
______ (6) Paid a utility bill for $3,400.
______ (7) Purchased $1,590 of store supplies on account.
______ (8) Recorded depreciation on store equipment of $4,000.
______ (9) Returned defective inventory purchased on account, $2,900.
______ (10) Recorded cash sales of $14,700.

(1) c (2) e (3) b (4) b (5) d (6) d (7) b (8) e (9) e (10) c

Difficulty: Easy
Larson - Chapter 07 #78
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Application
79. Outdoors Unlimited has the following transactions. For each transaction, indicate the appropriate
journal.
(a) Sales Journal
(b) Purchases Journal
(c) Cash Receipts Journal
(d) Cash Disbursements Journal
(e) General Journal
______ (1) Purchased merchandise for cash.
______ (2) Sold merchandise for cash.
______ (3) Purchased merchandise on credit.
______ (4) Sold merchandise on credit.
______ (5) Paid the utility bill.
______ (6) Owner invested more cash in the business.
______ (7) Recorded depreciation for the period.
______ (8) Borrowed money from the bank and received cash.
______ (9) Bought store supplies for cash.
______ (10) Customer paid off an account receivable.

(1) d (2) c (3) b (4) a (5) d (6) c (7) e (8) c (9) d (10) c

Difficulty: Moderate
Larson - Chapter 07 #79
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
80. Explain what is meant by footing and cross footing.

Footing is adding a column of numbers. Cross footing is adding debit and credit column totals and
comparing the sums for equality.

Difficulty: Easy
Larson - Chapter 07 #80
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
81. Explain the goals and uses of special journals.

Special journals are used for recording and posting similar types of transactions. The most common
special journals are cash receipts, cash disbursements, purchases, and sales. Special journals provide
a structure for more efficient data entry and posting. In addition, the separation of transactions, and
usually, duties, adds an effective internal control procedure to the accounting system.

Difficulty: Moderate
Larson - Chapter 07 #81
Learning Objective: 07-02 Explain the goals and uses of special journals.
Type: Knowledge
82. Discuss the differences in the special journals for a perpetual versus a periodic inventory system.

Under the perpetual inventory system, the Sales Journal has a column used to record the cost of
goods sold and inventory amounts for each sale. The periodic system does not record the increase in
cost of goods sold and decrease in inventory at the time of sale. The Purchases Journal and the Cash
Disbursements Journal in the perpetual system use an Inventory instead of a Purchases column.

Difficulty: Hard
Larson - Chapter 07 #82
Learning Objective: 07-02 Explain the goals and uses of special journals.
Learning Objective: 07-05 Journalize and post transactions using special journals in a periodic inventory system.
Type: Knowledge
83. Explain the use of controlling accounts and subsidiary ledgers.

The controlling accounts are part of the general ledger. Details on individual accounts such as
accounts receivable are kept in a specific subsidiary ledger. The balance in the controlling account
must match the sum of the balances in the matching subsidiary ledger accounts.

Difficulty: Moderate
Larson - Chapter 07 #83
Learning Objective: 07-03 Describe the use of controlling accounts and subledgers.
Type: Knowledge
84. Describe the posting process for special journals.

Posting to special journals is a three-step process: (1) individual amounts in the Other Accounts
column are posted to their general ledger accounts on a regular (daily) basis, (2) individual amounts
in a column that are posted in total to a controlling account at the end of a period are posted regularly
(daily) to the appropriate account in the subsidiary ledger, and (3) total amounts for all columns
except the Other Accounts column are posted at the end of a period to the appropriate account for each
column.

Difficulty: Hard
Larson - Chapter 07 #84
Learning Objective: 07-04 Journalize and post transactions using special journals.
Type: Knowledge
Dina Company uses a Sales Journal, a Purchases Journal, a Cash Receipts Journal, a Cash
Disbursements Journal, and a General Journal, and a perpetual inventory system. The following
transactions occurred during the month of December:

Larson - Chapter 07