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Unformatted text preview: CHAPTER 5 ACCOUNTING SYSTEMS EYE OPENERS 1. The individual accounts receivable ledger accounts provide business managers in- formation on the status of individual custom- er accounts, which is necessary for man- aging collections. Managers need to know which customers owe money, how much they owe, and how long the amount owed has been outstanding. 2. The major advantages of the use of special journals are substantial savings in record- keeping expenses and a reduction of record-keeping errors. 3. a. 400 b. None 4. a. 250 b. 1 5. a. Sometime following the end of the current month, one of two things may happen: (1) an overdue notice will be received from Kelly Co., and/or (2) a let- ter will be received from Kelley Co., in- forming the buyer of the overpayment. (It is also possible that the error will be discovered at the time of making pay- ment if the original invoice is inspected at the time the check is being written.) b. The schedule of accounts payable would not agree with the balance of the accounts payable account. The error might also be discovered at the time the invoice is paid. c. The creditor will call the attention of the debtor to the unpaid balance of $800. d. The error will become evident during the verification process at the end of the month. The total debits in the purchases journal will be less than the total credits by $3,600. 6. a. No, the error will not cause the trial bal- ance totals to be unequal. b. No, the sum of the balances in the cred- itors ledger will not agree with the bal- ance of the accounts payable account in the general ledger. 7. a. Purchases journal b. Cash payments journal c. Purchases journal d. Cash payments journal e. Cash payments journal 8. An electronic form is a software window that provides the inputs for a particular transac- tion. For example, a check form provides the inputs (payee, amount, date) for a cash payment transaction. An electronic invoice provides the inputs (customer, amount sold, item sold) for recording revenues earned on account. 9. The use of controlling accounts to verify the accuracy of subsidiary accounts is used in a manual system. In a computerized system, it is assumed that the computer will accur- ately sum the individual transactions in the subsidiary accounts in determining the ag- gregate balance. 10. For automated systems that use electronic forms, the special journals are not used to record original transactions. Rather, elec- tronic forms capture the original transaction detail from an invoice, for example, and automatically post the transaction details to the appropriate ledger accounts. 11. E-commerce can be used by a business to conduct transactions directly with custom- ers. Thus, an order can be received directly from the customer’s Internet input and cash can be received from the credit card. Many times, the cash is received prior to actually shipping the product, resulting in a faster revenue/collection cycle. Reducing paper- work throughout the cycle also improves the...
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- Fall '10
- 1971, ........., Cash Payments Journal, REVENUE JOURNAL