Chapter 5 (Part 1) - CHAPTER 5 ACCOUNTING SYSTEMS...

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CHAPTER 5ACCOUNTING SYSTEMSDISCUSSION QUESTIONS1.The individual accounts receivable ledgeraccounts provide business managers infor-mation on the status of individual customeraccounts, which is necessary for managingcollections. Managers need to know whichcustomers owe money, how much they owe,and how long the amount owed has been6.
outstanding.2.The major advantages of the use of specialjournals are substantial savings in record-keeping expenses and a reduction of record-keeping errors.7.An electronic form is a software window thatprovides the inputs for a particular transac-tion. For example, a check form provides theinputs (payee, amount, date) for a cashpayment transaction. An electronic invoiceprovides the inputs (customer, amount sold,item sold) for recording revenues earned onaccount.3.a.400b.None4.a.2508.The use of controlling accounts to verify the
b.15. a.Sometime following the end of the currentmonth, one of two things may happen:(1) an overdue notice will be receivedfrom Kelly Co., and/or (2) a let- ter willbe received from Kelley Co., in- formingthe buyer of the overpayment. (It is alsopossible that the error will be discoveredat the time of making pay- ment if theoriginal invoice is inspected at the timethe check is being written.)b.Thescheduleofaccountspayablewould not agree with the balance of theaccounts payable account. The errormight also be discovered at the time theinvoice is paid.c.The creditor will call the attention of thedebtor to the unpaid balance of $800.d.The error will become evident during theverification process at the end of themonth. The total debits in the purchasesjournal will be less than the total creditsby $3,600.accuracy of subsidiary accounts is used in amanual system. In a computerized system, itis assumed that the computer will accuratelysum the individual transactions in the sub-sidiary accounts in determining the aggre-gate balance.9.For automated systems that use electronicforms, the special journals are not used torecord original transactions. Rather, elec-tronic forms capture the original transactiondetail from an invoice, for example, and au-tomatically post the transaction details to theappropriate ledger accounts.10.E-commerce can be used by a business toconduct transactions directly with custom-ers. Thus, an order can be received directlyfrom thecustomer’sInternet input and cashcan be received from the credit card. Manytimes, the cash is received prior to actuallyshipping the product, resulting in a fasterrevenue/collection cycle. Reducing paper-work throughout the cycle also improves theefficiency of the process. For example, all ofthe accounting transactions can be fed au-tomatically from the initial Internet-basedinputs.
PE 51APRACTICE EXERCISESREVENUE JOURNALDateInvoiceNo.Account DebitedPost.Ref.Accounts Rec. Dr.Fees Earned Cr.Oct.7121Darcy Co................................32017122Triple A Inc............................47021123Whaley Co.............................

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Term
Spring
Professor
Veitz
Tags
Accounting, CASH RECEIPTS JOURNAL, Purchases Journal, REVENUE JOURNAL

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