Calculate cost of goods available for sale and cost of goods sold for the month.

5. Principles of an efficient and effective accounting information system include all of the following except

a. cost effectiveness.

b. flexibility.

c. useful output.

d. All of these options are principles.

6. Which of the following statements is incorrect?

a. A major consideration in developing an accounting system is cost effectiveness.

b. When an accounting system is designed, no consideration needs to be given to the needs and knowledge of the various users.

c. The accounting system should be able to accommodate a variety of users and changing information needs.

d. To be useful, information must be understandable, relevant, reliable, timely, and accurate.

7. All of the following are advantages of using subsidiary ledgers except they

a. eliminate errors in individual accounts.

b. free the general ledger of excessive details.

c. show, in a single account, transactions affecting one customer or one creditor.

d. make possible a division of labor.

8. Which of the following is not an advantage of a subsidiary ledger?

a. Shows transactions affecting one customer or one creditor in a single account.

b. Helps locate errors in individual accounts.

c. Puts greater detail in the general ledger.

d. Makes possible a division of labor.

9. Credit sales of assets other than merchandise are recorded in the

a. cash payments journal.

b. cash receipts journal.

c. general journal.

d. sales journal.

10. When the totals of the sales journal are posted at the end of the month, there will be credits to

a. Sales and Merchandise Inventory and debits to Accounts Receivable and Cost of Goods Sold.

b. Accounts Receivable and Cost of Goods Sold and debits to Sales and Merchandise Inventory.

c. Sales and debits to each individual customer account.

d. the Sales account only, and no debits.

11. The Other Accounts column of a multi-column journal is often referred to as the

a. Sundry Accounts column.

b. Controlling Account column.

c. Credit Account column.

d. Debit Account column.

12. Companies record credit purchases of equipment or supplies in the

a. cash payments journal.

b. cash receipts journal.

c. general journal.

d. one-column purchases journal.

13. In the expanded purchases journal, debits are made in which columns?

a. Accounts Payable, Merchandise Inventory, and Office Supplies

b. Merchandise Inventory, Office Supplies, and Store Supplies

c. Cash, Office Supplies, and Store Supplies

d. Accounts Payable, Cash, and Merchandise Inventory

14. If a customer takes a sales discount, an entry is made in the

a. cash receipts journal.

b. sales journal.

c. cash payments journal.

d. general journal.

15. Claims for which formal instruments of credit are issued as proof of the debt are

a. accounts receivable.

b. interest receivable.

c. notes receivable.

d. other receivables.

16. Interest is usually associated with

a. accounts receivable.

b. notes receivable.

c. doubtful accounts.

d. bad debts.

17. The receivable that is usually evidenced by a formal instrument of credit is a(n)

a. trade receivable.

b. note receivable.

c. accounts receivable.

d. income tax receivable.

18. Which of the following receivables would not be classified as an "other receivable"?

a. Advance to an employee

b. Refundable income tax

c. Notes receivable

d. Interest receivable

19. Notes or accounts receivables that result from sales transactions are often called

a. sales receivables.

b. non-trade receivables.

c. trade receivables.

d. merchandise receivables.

20. Larson Company on July 15 sells merchandise on account to Stuart Co. for $1,000, terms 2/10, n/30. On July 20 Stuart Co. returns merchandise worth $400 to Larson Company. On July 24 payment is received from Stuart Co. for the balance due. What is the amount of cash received?

a. $600

b. $588

c. $580

d. $1,000