CHAPTER 3

Question 1

Source documents

Answer 1

Source of all information recorded by a business

Question 2

Source document example ?

Answer 2

• Petty cash voucher
• Cheque received
• Wages/payroll records
• Cheque stubs/counterfoil

Question 3

Accounting software package

Answer 3

Enable business to keep record and process transactions electronically

Question 4

2 types of accounting software package

Answer 4

• Off the shelf - Bought and used by many organisation
• Be spoke - Designed and tailored for the business specific needs

Question 5

Main advantage of a computerised accounting system VS manual

Answer 5

When one module is updated, the other related modules are automatically updated

Question 6

Key features of a computerised accounting system

Answer 6

1) Controls
2) Standing data - data that will not change frequently
3) Account codes - general ledger

Question 7

Cloud accounting

Answer 7

Data and software is held remotely on the computer servers of the service provider hosting the software

Question 8

General ledger

Answer 8

Accounting record which summaries the financial affairs of a business

Question 9

What’s in GL

Answer 9

• Details of asset, liabilities, capital, income and expenditure
• Consists of a large number of different ledger account

Question 10

Does reconciliation between TR and Receivable ledger necessary in computerised accounting system

Answer 10

No, bcs both are updated simultaneously

Question 11

When is sales tax accounted for? (Credit sale/purchase)

Answer 11

When invoice is received and is entered into the accounting system

Question 12

When is sales tax accounted for ? (Cash sale/purchase)

Answer 12

When the money is received from the customer/paid to supplier

Question 13

Tax posted to the sales tax control account @ the point of ???

Answer 13

Point of sale/purchase

Question 14

Benefits of using code

Answer 14

1) Shorter
2) Save storage space
3) Identify the correct account for posting

Question 15

Computer activity

Answer 15

Input → Processing → Output

Question 16

How can data entry errors happen ?

Answer 16

⦿ Source document destroyed/damaged
⦿ Poor handwriting
⦿ Details omitted/incorrect
⦿ Transcription error
⦿ Poorly skilled staff
⦿ Malicious intent

Question 17

How to reduce data entry error ?

Answer 17

⦿ Well-designed data entry screens that mirror the source documents for ease of entry
⦿ Well-designed form that are easy to read
⦿ Automatic data entry; scanning
⦿ Verification by entering twice & check for inconsistencies
⦿ Using tick boxes or dropdown list
⦿ Properly trained & experienced staff
⦿ Validation technique ??

Question 18

Validation Technique

Answer 18

Ensure data entered is possible and reasonable BUT not necessarily correct

Question 19

List 6 of Validation Technique

Answer 19

1) Field presence - essential field cannot blank
2) Field length - Correct min/max number of characters
3) Range - Within a predetermined range
4) Format - individual characters are valid
5) Batch header - match totaled by computers & totaled by documents in batch (batch processing)
6) Check digit - extra digit in code calculated by computer using algorithm

Question 20

Batch processing

Answer 20

Similar transactions are gathered into batches, then each batch is sorted and processed by computer

Question 21

Control total in batch processing

Answer 21

Make sure no error when batch is input ‣ total value of transaction input = previously calculated

Question 22

Accounting package consists of…

Answer 22

Several accounting modules

Question 23

Computer program/software

Answer 23

Instructions that tell electronics how to process data

Question 24

Advantages of accounting package

Answer 24

⦿ Can be used by non-specialist
⦿ Large amount of data can be processed very quickly
⦿ More accurate
⦿ Data is analysed rapidly to produce useful informations

Question 25

Disadvantages of accounting package

Answer 25

⦿ Initial time & cost involved in installing the system ⦿ Need for security check ⦿ Must develop system of coding ⦿ Lack of audit trail - not easy to trace mistake ⦿ Possible resistance

Question 26

Module

Answer 26

A program which deals with one particular part of a business accounting system

Question 27

What do you call several set of modules

Answer 27

Suit

Question 28

Integrated software

Answer 28

Data entered in one module will be passed automatically through any other module if it's relevant

Question 29

Advantages of Integrated Software

Answer 29

⦿ Possible just to make one entry ⦿ Specify reports then software will auto extract required data ⦿ Simplify workload of user

Question 30

Disadvantages of Accounting Software System

Answer 30

⦿ Requires more computer memory ⦿ Has fewer facilities than a set of specialised modules

Question 31

Output from a receivable ledger system

Answer 31

- Invoice - Statements - Aged receivable list - Sales analysis report - Response to enquiries - Customer lists

Question 32

Output from a trade payable ledger system

Answer 32

- List of transactions posted - Analysis of expenditure - List of supplier balances - Copies of supplier a/cs

Question 33

Standing data example

Answer 33

- Account number - Name - Address - Credit details - Bank details - Settlement discount details

Question 34

Variable data example

Answer 34

- Transaction date - Transaction description - Transaction code - Debits - Credits - Balance

Question 35

Output from general ledger

Answer 35

1) Trial balance 2) Financial statement

Question 36

Actual data needed by GL to update ledger accounts

Answer 36

1) Date 2) Description 3) Amount 4) Account codes @distinction code