Weygandt 8th Canadian Edition Verified Test Bank

APpendix C: SubsidIary ledgers and special journals

Exercises

1. A general ledger is a group of accounts that share a common characteristic such as accounts receivable but have additional details.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

2. A subsidiary ledger maintains account details that the general ledger cannot capture.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

3. Common subsidiary ledgers include accounts payable, accounts receivable, and inventory.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

4. The accounts payable subsidiary ledger contains data for individual customers such as balances owing.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

5. Each general ledger control account must equal the total balance of the individual accounts in the related subsidiary ledger.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

6. Each general ledger control account does not have to equal the total balance of the individual accounts in the related subsidiary ledger.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

7. One advantage of a subsidiary ledger is that it shows all the transactions that affect one customer or creditor in a single account.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

8. A disadvantage of subsidiary ledgers is that they do not aid in locating errors in individual accounts.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

9. Posting to the individual accounts in the subsidiary ledger are made daily.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

10. Postings to the control account are made daily.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

11. For a company with a large number of similar transactions, it is beneficial to create a special journal for those transactions.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

12. The sales journal is used to record the sales of merchandise for cash.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

13. Cash sales of merchandise are entered into the cash receipts journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

14. The sales journal is used to record the sales of merchandise on account.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

15. Daily postings are made from the sales journal to the individual accounts receivable in the subsidiary ledger.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

16. Having a sales journal means that only the totals rather than each transaction are posted to the general ledger.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

17. A good control practice would be to have the qualified individual responsible for the sales journal to also be responsible for the cash receipts journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

18. All receipts of cash are recorded in the cash receipts journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

19. The purchases journal may include purchases beyond inventory and supplies such as other expenses on account.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

20. Purchase invoices are used as source documents for entries into the purchases journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

21. All payments of cash are included in the cash receipts journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

22. Those transactions that cannot be entered into a subsidiary ledger are recorded in the general leger.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

23. In a perpetual inventory system, the purchases account is used to record the purchases of inventory.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

24. Cost of goods sold is typically calculated at the end of the period under a periodic inventory system.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

MULTIPLE CHOICE QUESTIONS

25. A subsidiary ledger is used to

a) track individual balances.

b) maintain details that the general ledger cannot capture.

c) balance its overall total to the control account.

d) all of the above

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

26. Common subsidiary ledgers include

a) accounts payable, accounts receivables, inventory, and a general one.

b) inventory, payroll, long lived assets, and a general one.

c) inventory, accounts receivable, and payroll.

d) general accounts, accounts payable, and long-lived assets.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

27. An accounts payable ledger keeps track of transactional data related to

a) employee pay records.

b) individual customers.

c) individual creditors.

d) property items.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

28. The accounts receivable subsidiary ledger keeps track of transactional data related to

a) employee pay records.

b) individual customers.

c) individual creditors.

d) property items.

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

29. The advantages of subsidiary ledgers include all of the following except

a) moving excessive details to the general ledger.

b) showing transactions that affect one customer or creditor in a single account.

c) helping locate errors in individual accounts.

d) freeing the general ledger from excessive detail

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

30. The advantage(s) of subsidiary ledgers include

a) freeing the general ledger from excessive detail.

b) showing transactions that affect one customer or creditor in a single account.

c) helping locate errors in individual accounts.

d) all of the above

Difficulty: Easy

Learning Objective: Describe the purposes and advantages of maintaining subsidiary ledgers.

Section Reference: Subsidiary Ledgers

CPA: Financial Reporting

AACSB: Analytic

31. If a transaction cannot be recorded in a special journal it is

a) not a valid transaction.

b) recorded in the general journal.

c) already recorded elsewhere.

d) not a financial transaction.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

32. The sales journal is used to record

a) all sales made by the company.

b) only cash sales.

c) only credit sales.

d) only cash and credit sales.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

33. Posting from the sales journal to individual accounts receivable subsidiary ledger accounts takes place

a) daily.

b) weekly.

c) at the end of the month.

d) quarterly.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

34. In order to have good internal control, the individual responsible for the sales journal should also be responsible for

a) cash receipts.

b) inventory.

c) all general journal entries.

d) none of the above

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

35. The most common purchases on account include

a) supplies.

b) inventory.

c) inventory and supplies.

d) inventory, supplies, and staff wages.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

36. The cash payments journal shows

a) all payments of cash.

b) all payments and receipts of cash.

c) all entries that affect cash.

d) all purchases made on account.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

37. Entries in the cash payments journal are typically made using

a) sales invoices.

b) pre-numbered cheques.

c) supplier invoices.

d) all of the above

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

38. When both control and subsidiary accounts are used

a) both the control and subsidiary account must be identified in journalizing.

b) for posting, it is a dual process, once to the subsidiary and once to the control account.

c) both a and b

d) none of the above

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

39. When using special journals for recording and posting transactions, it does not matter if it is a perpetual inventory or periodic inventory system.

a) They are exactly the same processes and accounts.

b) They are essentially the same with two exceptions 1) relating to account titles used and 2) the need under one for an additional column for COGS.

c) The two are completely different.

d) It is not possible to identify the type of inventory system being used from the special journal.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

MATCHING QUESTIONS

40. For each of the following accounts below, match it to the appropriate ledger where it would appear using:

G – general ledger account and

S – subsidiary ledger

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

41. Match the items below to the special journal in which each would be recorded:

A. Sales

B. Cash Receipts

C. Purchases

D. Cash Payments

__ 1. Annual premium on fire insurance of $ 6,525 is paid using cheque 121.

__ 2. Purchased $ 5,500 of supplies on account.

__ 3. Sold $ 26,500 of merchandise to Bob Kang on account.

__ 4. K.S. Override invests $ 10,000 in the business.

__ 5. Cheque 2569 from Almonds Inc. for $ 2,500 is received in full payment of invoice 156.

__ 6. Inventory of $ 7,850 is purchased from Kick It Up Ink using cheque 125.

Difficulty: Easy

Learning Objective: Record transactions in special journals and post to subsidiary and general ledgers.

Section Reference: Special Journals

CPA: Financial Reporting

AACSB: Analytic

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