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Wilkins Oil Company distributes petroleum products. Their accounting information system is designed to meet the needs of a petroleum distributor.
1. Wilkins Oil Company distributes petroleum products. Their accounting information system is designed to meet the needs of a petroleum distributor. They recently purchased a manufacturing business. To save money, Wilkins Oil Company would like to be able to use their current accounting information system for the manufacturing business. However, their current system is not designed to perform cost accounting or to meet the needs of a manufacturing business. What element of an effective accounting information system is Wilkins Oil Company's system missing in regards to the needs of the manufacturing business?
a. Accuracy
b. Control
c. Compatibility
d. A good cost/benefit relationship
2. Jeezy Inc. had a bank balance of $6,500 at the end of the month. They also had the following reconciling items:
Deposit in transit $2,300
Interest revenue earned on the account $12
Outstanding checks $1,400
Bank service fee $25
Booking error (check for $500 was rec. as $50) $450
NSF checks $150
- What was the adjusted balance for Jeezy Inc.?
a. $5,887
b. $6,800
c. $8,200
d. $7,400
3. The department within the company that has custody over cash receipts from customers may also be allowed to ___________.
a. Grant credit to customers
b. Receive remittance advices from customers
c. Post cash receipts to the general ledger
d. Make deposits into the bank
4. _______ provide(s) useful information to management by delineating which customers are current and which are overdue on their accounts, and by reporting how long the account has been outstanding.
a. Net realizable value of accounts receivable
b. The allowance method
c. The aging schedule
d. Interim financial statements
5. ABC Company requires that all checks over $1,000 be signed by two corporate officers. This required review of large checks by upper management is an internal control focusing on __________.
a. Safeguarding assets
b. Promoting operational efficiency
c. Encouraging employees to follow company policy
d. Ensuring accurate and reliable accounting records.
6. Which of the following is NOT an advantage of using a lock-box system?
a. A lock-box system eliminates all the data entry tasks for the accounts receivable clerk.
b. A lock-box system allows the company faster access to cash received from customers.
c. A lock-box system deters theft by eliminating the mailroom clerk's access to cash.
d. Segregation of duties is facilitated by using a lock-box system.
