 In this presentation we will take a look at some multiple choice questions related to special journals. First question, the sales journal records A. Purchases on account, B. Sales on account, C. Cash sales, D. Cash purchases, or E. Cash receipts. We'll read it one more time then see if we can go through it and use the process of elimination to narrow down the options. So we got the sales journal records A and we might want to think about it first and try to answer it's just the stem of the question as we go. The sales journal, remember if we think about these journals we're looking at these special journals, these are going to be journals we would use if we're using more of a manual system in order to save time. And the sales journal, we're trying to group transactions that will be similar in nature. So sales journal you would think just by the title would have something to do with sales. So we could start there and say okay can we narrow some of this down if we're talking about sales. We first have purchases on account and we might say purchases is not really sales so maybe that would not move the price across that out. Second one says sales on account, well there's sales so that seems reasonable. Let's read through the rest of them and see what else we have. Third one C says cash sales and it says sales again so there's two that have sales so I'm going to keep that one for now and we'll come back to it. Next one D says cash purchases, no sales involved in that one so probably we can't eliminate it. E says cash receipts. Once again no sale happened, this is for a sale that happened in the past that we got receipts for possibly but it doesn't have a sale here so I think we're narrow it down to B and C. So if we read it one more time the sales journal records. B says sales on account and C says cash sales so which of those two do we think it should be and the answer is going to be actually B and this is going to you can't really tell just from the name of the journal and we do have to just kind of know that the sales journal does not represent all sales so clearly these are two types of things where two different types of sales transactions are happening. The sales journal really means sales for accounts receivable meaning it's really kind of like the accounts receivable journal might be more appropriately named or the sales on account journal or the sales on credit journal but that's it's going to be B it has to be that if we received cash and made a sale and got money for it at the same point in time then it would go into the cash receipts journal. So the answer then would be the sales journal records B sales on account. Next question term for accounting information system report useful understanding timely and pertinent information for effective decision making is a control principle B compatibility principle C cost benefit principle D flexibility principle or E relevance principle. So once again let's read through this term and go through them again. So it's going to be a term for an accounting in an accounting information system report useful understandable timely and pertinent information for effective decision making is that the control principle doesn't really the control principle doesn't sound for it we want to be useful understandable and timely. I think that's going to be kind of a more overarching principle than the internal controls or controls principle. So I'm going to cross that out the second one B says compatibility principle and once again it's kind of a more of a broad term than you would think compatibility useful understanding timely those are really our major overarching kind of principles that we want to have from the accounting information system so I think that's a bit narrow. B is going to be a cost benefit principle and that is something we want to take into consideration with just about everything that we do to see if the added steps we're taking are worth making from a cost benefit analysis but it's not really our overarching principle this looks like our overarching principle of what we want from an information system useful understandable timely we do as we consider each of those aspects want to consider the cost benefit but doesn't sound like it D flexibility principle not really sure exactly what that is you know but so I'm going to keep that for now and then he says relevance principle and relevance seems to seems to cover a lot of this stuff right relevance useful understandable and timely so if we break it down to D and E let's read through it one more time term for accounting information system report useful understandable timely and pertinent information for effective decision making is it D flexibility principle or E relevance principle and I think the better answer here is going to be E because that's what makes it relevant to our decision makers and that's what of course the information system is designed to be is relevant in terms of it being useful understandable and timely meaning the information is being generated in such a way that it's it's relevant to the decision makers and that means it has to be somewhat timely so that we can still make decisions with it without it being too old so that's going to be it so once again final answer term for an accounting information system report a useful understandable timely and pertinent information for effective decision making is E the relevance principle next question the purchases journal records a purchases on account be sales on account see cash sales D cash purchases and E cash receipts let's read it one more time go through the information see if we can cross anything out using process of elimination the purchases journal records a purchases on account now before we do this actually you know obviously we're talking about the purchases journal and this is once again a special journal it's going to be recording transactions that have a similar nature to them in this case being purchases so you would think that we would be grouping transactions together that have purchases within them keeping that in mind let's go through these one more time or again maybe not last so a purchases on account well that has purchased in it in it so that would be a contender be sales on account well that's the opposite of a purchase so I'm going to cross that out probably not gonna be the sales on account see cash sales again that's a sales type thing and we're on the purchases type things so I don't think it's that then D says cash purchases well there's purchases again so let's keep that as a contender he says cash receipts also doesn't sound we're not gonna get cash when we make a purchase of stuff we're gonna be spending cash most likely so I'm gonna say it's gonna be down to a and D let's read it one more time the purchases journal records a purchases on account or D cash purchases and of the two it's actually gonna be a purchases on account reason being is that although it's called the purchases journal purchases is not the thing that's driving this process it's really the fact that we're purchasing things on account meaning it may be better called the accounts payable journal we're buying things on account and so therefore it has to be if we but if we purchase stuff for cash then it would go on the cash payments journal rather than the purchases journal