Using Sage 50 Accounting 2018 Mary Purbhoo Instructor Solution Manual – Test Bank

Complete Test Bank With Answers

 

 

Sample Questions Posted Below

 

CHAPTER 5: Groen Fields

Review Questions

1. Why would you want to work in a module window instead of the Classic view window to enter transactions? Are

there any disadvantages?

In the Enhanced view, the separation of all the different module features, transactions and options makes it

easier to know what journal or ledger option to use. You would also choose to use the module window when

most of the transactions you usually enter are in that module. By creating shortcuts for transactions in other

modules, you can complete most of your work from the single window. The main disadvantage is the need

to change modules to complete all of the accounting work.

2. How would you enter a purchase on account that includes a partial payment by cheque?

Enter the purchase for the full amount. Then prepare a separate Payments Journal entry for the amount of

the down-payment against that purchase, as if you are making a partial payment. If you record both parts in

the Purchases Journal by entering the payment amount on the second invoice line with a negative amount

and Bank as the account, the cheque number will not be updated correctly. Furthermore, only the amount

owing is included in the supplier’s ledger record – the full invoice amount will not appear (the supplier

history is incomplete – only the net receivable amount shows in the aged detail reports).

3. What role does the Accounts Payable account play when you are using the Payables Ledger and when you are

using only the General Journal?

When you are using only the General Journal, Accounts Payable is just like any other postable account.

When you use the Payables Ledger, Accounts Payable is the linked control account credited automatically by

the program for Pay Later purchases and debited automatically for payments. It stores the balance of all

amounts owing to suppliers. You cannot access the Accounts Payable account from the Select Account lists

in journals when it is used as a linked account, so you will be unable to enter pay later purchases. Accounts

Payable is updated automatically and only from supplier transactions in the Purchases and Payments

journals.

NOTE: In the Accountants’ Edition of Sage 50, the Accounts Payable account is available for posting so that

the accountant can make correcting adjustments.

4. How is entering a purchase invoice in the Purchases Journal different from entering it in the General Journal?

What advantages are there to using the Purchases Journal instead of the General Journal for entering purchase?

transactions? Why should you use the Purchase Journal?

In the General Journal, you enter each account (expense or asset, GST Paid, Freight Expense, Accounts

Payable) on a separate journal line with the appropriate debit or credit amount. If non-refundable PST is

paid on the purchase, you must manually calculate and add this amount to the expense or asset portion of the

journal entry. In the Purchases Journal, you enter only the asset (or expense account number). The freight is

entered as an amount in the appropriate field, GST and PST are entered as a code for the combination of taxes

and tax amounts are calculated and entered automatically. If you need to debit Accounts Payable instead of

crediting this account, you can enter a negative amount. Supplier payment terms, including discounts, are

also calculated automatically when the purchase is entered in the Purchases Journal. With a General Journal

entry, you must calculate and record a discount amount separately as well and other terms such as due dates

will not be used. The program uses the linked accounts to complete the Purchases Journal entry. The entries

in the Purchases Journal are also linked to supplier accounts, so these are updated automatically. When you

use the General Journal, the supplier ledgers must be updated manually.

You will be unable to enter pay later purchases in the General Journal after setting up the Payables Ledger

because the Accounts Payable linked account cannot be selected for journal entries.

Using the Purchases Journal offers a greater measure of control because of the linked accounts and

integration of ledgers. Supplier ledgers are continually updated and many more reports are available that

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26can assist with financial planning and decision making. Furthermore, errors are less likely because so many

parts of the invoice can be entered automatically.

5. What happens when you post a purchase invoice? What linked accounts are affected and how are they affected?

Posting a purchase invoice will update all the linked accounts involved – Accounts Payable (or Cash or Bank

for a purchase with payment), GST Paid if GST is applied and Freight Expense if freight is charged. If PST is

paid and a PST rate is entered, this amount is added automatically to the expense or asset amount. The

supplier’s ledger record is updated for the purchase to include the new balance owing to this supplier along

with complete invoice details. The amount of the invoice is added to the balance for Accounts Payable – the

total amount owed to all suppliers

The only difference is that you cannot see or correct the Payments Journal entry from the Purchases Journal

and vice versa. (You can view the payments from both journals when you choose Adjust Payment from the

Payables module Payments icon drop-down list of shortcuts.) Similarly, the journal reports are separated

unless you choose All Journal Entries from the Report Centre, Financials list, or choose the Reports menu,

Journal Entries, All for the report.

6. What happens when you post a payment? What linked accounts are affected and how are they affected?

Posting a payment will update all linked accounts involved – Accounts Payable will be reduced and Cash or

Bank will be reduced. If discounts apply, they will also be posted to the correct Purchase Discounts account

to reduce the amount of cash owed and paid. The supplier’s ledger balance owing is reduced by the amount

of the payment plus the discount, if there is one.

7. How is a cash purchase different from a purchase that is paid later?

Cash or Cheque is selected as the method of payment in the Payment Method field instead of Pay Later. The

Cash or Bank account is credited instead of the Accounts Payable account and a cheque number field is

added to the journal form. The rest of the entry is unchanged

8. Describe two methods of entering a cash purchase. How are they different?

In the Purchases Journal, choose Cash or Cheque as the method of payment and complete the rest of the

invoice in the usual way. Cheque numbers are added automatically. In the Payments Journal, choose Make

Other Payment as the type of transaction. You can also choose Pay Expenses from the Home window

Payments icon drop-down list of shortcuts. To change the payment to cash, select Cash as the method of

payment. Add the source code and a comment to the transaction and complete the rest of the transaction in

the usual way. Both transactions produce the same journal entry. Both methods will enter the default

account for the supplier from the ledger record; cheque is the default method of payment and the number is

added automatically. The Source and Date are required fields for both methods and further description

details and comments are optional.

9. What reasons may there be for the message “there is no data to report” when you request a report?

If you receive the message that there is no data to report, you may have no transactions for that type of

report. E.g., requesting a supplier report for a supplier from whom there were no purchases. It is also

possible that the date range you chose for the report was incorrect, so that there were no transactions within

the selected time period. E.g., requesting a Payments Journal report for April 8 to April 8 when the latest

payment entry was posted on April 7 will also result in this message.

10. What must you do to post a transaction to the Accounts Payable account?

To post to the Accounts Payable account, you must enter a Pay Later purchase in the Purchases Journal, or a

payment in the Payments Journal. The program enters Accounts Payable as the default linked account in

both situations. Since you cannot select Accounts Payable from the Select Account list, you cannot use the

General Journal for purchases or payments once the Payables Ledger history is finished.

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2711. If you forgot to add sales tax to a purchase invoice, how could you make the correction?

To add sales taxes to a purchase after posting the journal entry, you can adjust the invoice if you have not

cleared the invoice. Open the Purchases Journal and click the Adjust Invoice tool. Or click Adjust Invoice in

the Invoices (Purchase Invoices) drop-down list of shortcuts in the Home window. Select the invoice with

the error. Double-click it or click the Select button to display the purchase. Add the taxes by selecting the

correct tax code and post the changed entry. The program will create the reversing and the correcting entry.

This is the simplest and the preferred method.

If the tax code is not available (choosing the code in the journal does not update the invoice correctly), check

the tax settings in the supplier’s ledger record to ensure that the supplier is not marked as exempt for the

taxes.

If you want enter the tax separately, that is, create a new invoice for the amount of the tax, enter the tax

amount in the Amount field and the GST Paid account in the Account field. If PST was omitted, enter the tax

amount in the Amount field and enter the asset or expense account for the purchase in the Account field. Be

sure to add an appropriate comment and description for the additional invoice. This method is not

recommended because the tax reports may not be updated correctly if you create a separate invoice for the

tax amounts.

12. How can you connect sales tax amounts in the General Journal to their linked accounts? Why is it important to

add this information?

Once a sales tax account is selected, the Sales Taxes button is available if the sales taxes have been set up

with properly linked accounts. This button accesses the sales tax details screen that allows you to select the

appropriate tax code and type of transaction – sale or purchase – and to verify the tax and purchase amounts

so that the taxes can be correctly added to tax reports. Again, the report with fewer entries may be easier to

check.

13. What information is included in the Payments Journal Report? How would you get the Purchases Journal and the

Payments Journal entries in a single report? Why might you want separate reports?

The Transaction Detail Report includes all types of transactions completed in the Payments Journal – account

payments, cash purchases, credit card payments (Chapter 12) and payroll remittances (Chapter 8). From the

Reports menu in the Home window, choose Transaction Detail Entries and All if you want to include

Purchases Transaction entries as well. From the Report Center, choose Financials and All Journal Entries and

click Create or click Modify This Report to change the default report options. Entries for all other journals will

also be included in this report.

You might want to print the reports separately to check a specific entry that will be more difficult to locate in

the larger reports. For example, if you are checking your corrections, or you need to create a reversing entry

manually, you may want to print the original journal entry and compare it with the display for the reversing

entry to be certain that you have completed the reversal correctly. The final step after reversing an entry will

be to enter the correct invoice. Again, the report with fewer entries will be easier to check.

14. How do you make corrections to a purchase invoice after posting? What do you enter? What does Sage 50 do?

To make a correction after posting, you can adjust the invoice if you have posted it (see question #11, part

one). Sage 50 creates two new journal entries, the reversing entry and the correct one. If you need to

complete a reversing entry, for example, if you selected the wrong supplier or entered the invoice twice, click

the Reverse Invoice tool from the Adjusting Invoice screen. Click Yes to confirm the reversal. Refer to

Appendix C in the Text if you need to reverse the invoice manually.

If the invoice has been paid, Sage 50 will automatically offer to create a credit note for the supplier. In this

case, you should contact the supplier to discuss the correction. You can use the credit to offset the balance for

future purchases.

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2815. How do you make corrections to a payment after posting? What do you enter? What does Sage 50 do?

To make a correction after posting, you can adjust the payment if you have posted it (see question #11, part

one). You can choose Adjust Payment from the journal or choose Adjust Payment from the Payments icon

drop-down list of shortcuts in the Home window. Select the payment you need. Double-click it or click the

Select button to display the payment. Make changes and then post it. Sage 50 creates two new journal

entries, the reversing entry and the correct one.

If you need to complete a reversing entry, click the Reverse Payment tool in the Adjusting Payment screen

and click Yes to confirm. If you need to enter the reversing entry manually, print the original journal entry

for comparison. Choose the option to Include Fully Paid Invoices (from the Payment menu or the tool icon).

Then re-enter the original incorrect entry, adding a minus sign to the positive amounts in the Amount field.

Remove the minus sign if the original amounts were negative. Display the journal entry and compare it with

the printed report to be certain that all debits and credits are reversed. Post the entry. The final step after

reversing an entry will be to enter the correct payment. If the reversal was for an NSF cheque, the correct

payment will be entered later, when the replacement cheque is entered.

The Accounts Receivable account balance and the supplier balance owing will be adjusted appropriately for

the revised payment. If a cheque has been printed and sent, you should notify the supplier and arrange with

the bank to void the cheque.

16. How do you reverse a posted purchase invoice? When would you do this?

To reverse an invoice, open the Adjusting Invoice screen as you would to make other corrections (see

question #11). Then click the Reverse Invoice tool or choose the Purchase menu and click Reverse Invoice.

You would reverse an invoice if you have entered the wrong supplier for the purchase. If you adjust an

invoice by changing the supplier, the terms and default accounts may be incorrect. You would also reverse

an invoice when you have entered the invoice twice in error. If a transaction required a large number of

changes, you might also reverse the original one before entering the correct details as a separate entry.

17. How do you correct a purchase and payment after posting if you selected the wrong supplier?

In this case, you should reverse the original entry. Open the journal you need and begin the adjusting entry

procedure by bringing the transaction to the screen. (See questions #11 and #15.) Then click the Reverse tool

and click Yes to proceed with the reversal. If the cheque was printed and sent, you would want to arrange

with the bank to void the cheque that was sent to the wrong supplier or allow a credit balance. In either case,

the error and your action should be discussed with the supplier.

18. Explain the differences between Quick Add, Full Add and Continue. When would you use each of these? What is the

effect of clicking the Cancel button instead of one of these options?

Choose Quick Add to add only the supplier’s name to the new record and continue with the journal entry.

Choose Full Add to open the ledger form and access all the record details for the supplier, just as you do

from the Suppliers window. After you click Save And Close, you will return to the Purchases Journal. Full

Add gives you the opportunity to change the default settings, such as tax codes, or to save the payment

terms or linked expense accounts for the supplier. If you want to change these settings after using Quick

Add, you must edit the supplier record. Choosing Continue will not create a supplier record, but will add

the supplier’s name to the purchase invoice. This selection is useful for one-time suppliers. Continue is not

an option when Pay Later is needed as the method of payment.

You might choose Cancel if you have typed a new name without intending to do so, when you have typed a

new name incorrectly or when you want to close the journal without entering an invoice.

19. Describe the different methods of adding a new supplier.

From the Payables module window, click Add Supplier from the Suppliers icon drop-down list of shortcuts

to open a new supplier ledger form. Or, click the Suppliers icon in the Home window to open the Suppliers

window. Click the Create tool or choose Create from the File menu to open a new supplier ledger form.

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29Enter the address, options and memo details; click Save And Close to save the record.

You can also add a new supplier directly from the Purchases Journal window. Type the new name in the

Supplier field and press Tab. The program recognizes that the name is new and gives you the chance to

create the record with three options: Quick Add, Full Add and Continue (see answer to question #19).

The third option is using the Add Link above the Supplier field. Clicking this link will open the new supplier

ledger form immediately so you can add as many of the supplier details as you want. When you click Save

And Close, you will return to the journal with the supplier information added.

20. Explain the difference between clicking the Add link above the supplier field in the Purchases Journal and pressing the

Tab key after entering a new name in the supplier field.

Clicking the Add Link above the Supplier field always opens the new supplier ledger form immediately,

whether or not you entered the new name first. You can add as many of the supplier details as you want –

only the name is required to create the new record. When you click Save And Close, you will return to the

journal with the supplier information added. If you typed the name in the journal it will be entered on the

ledger form when that opens. If you have not yet entered the name, you can add it in the ledger.

If you want to use the Tab key to create a new supplier, you must first type a new name and then select one

of the three options from the dialogue window (as described in question #19). You must enter a name to use

this approach, but you do not need to open the new ledger record form before returning to the journal. Only

the Full Add option opens the ledger, like the Add link and returns you to the journal after you save the

record. The other two options are shortcuts: choose Quick Add to create an incomplete record with only the

name; choose Continue if you do not want to create a record for the supplier. These final two options will

return you directly to the journal without opening the ledger.

21. How do you enter a purchase discount?

If the correct discount terms are on the invoice, Sage 50 completes the calculation of discount amounts

automatically. When a payment is made or received, the discount will be available in the journal if the

discount date has not yet passed. Clicking the amount in the Discount Taken field will enter the discount.

The discount amount will automatically be linked to the discount account and will reduce the amount owing

and the default amount paid. You can also add a discount amount to the Discount Taken field manually

when no discount is entered automatically.

22. When might you not take a discount even if it is available in the journal?

Sage 50 will show discounts as available as long as the discount period has not expired. If discounts are not

allowed on partial payments, they will not be taken even if they show as available. The discount terms and date

may also be incorrect so that the discount shows in error. If the terms are incorrect, the supplier’s ledger may

also require a correction.

23. When would you use recurring entries?

You would use recurring transactions for transactions that occur more than once when all or most of the

information for the entries is the same each time. You might also use them for more complex transactions

when it may be easier to change some information than to re-enter all the details from scratch each time.

24. Describe how you can change a recurring entry in Sage 50.

To change a recurring transaction, you must first recall it. Make the journal entry changes you want. You can

edit this transaction like any other entry before posting. Then post it and confirm that the entry has changed

or store it again if you want to save the changes. Confirm that you want to replace the previous version.

25. Why would you not enter adjustments for supplies used as recurring transactions? Why might you want to save them

as recurring transaction? In this case, how would you set them up and use them?

Normally supplies used will vary from one time period to the next. If the entry were stored, the amounts

would require editing each time the entry was recalled. If you chose to enter the supplies used as a constant

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30and recall the entry regularly, you should enter an additional adjustment at the end of the fiscal period to

account for the difference between the amounts already expensed and the actual count of supplies on hand.

This may duplicate work.

There may still be cases where you would store and recall the adjustment and change the amounts if doing

so will be faster than re-entering all the accounts. Enter the adjustment in this situation just as you would

any other journal entry. Then recall the transaction when it is time to enter the adjustment again. At this

time, you can change the amounts for the current period and resave the entry or post it without saving the

changes. The advantage is that you will not need to enter the accounts each time. The disadvantage is that

you may forget to change the amounts when you recall the entry, and post the adjustment incorrectly. Dates

are also entered automatically, so they should be checked and corrected if necessary. Recurring entries for

the General Journal use the same Source and Comment as the original entries, so these also require updating

when you recall the transaction.

26. How do you create shortcuts in Sage 50? When would you create shortcuts and why would you want to do so?

In the Enhanced view Shortcuts pane, click Customize to open the Customize Shortcuts screen. Click the

module for which you want to add shortcuts to expand the list. Click the task for which you are adding the

shortcut and click Add to place this on the Shortcuts list text box. Click OK to return to the Home window

with the new task listed under Shortcuts.

Adding shortcuts allows you to complete transactions and tasks for other modules from the single module

window. The same list of shortcuts is available from all module windows in the Enhanced view.

Shortcuts are user preferences, so each user can create his/her own set of ten shortcuts.

27. How do you enter a General Journal transaction when you are working from the Payables module Home window

(Enhanced view)?

You can add a shortcut for the General Journal (see #26) and click it to open the journal. You can also open

the Company module window by clicking Company in the Modules pane. Then click the General Journal

icon to open the journal. The third option is to change to the Classic view and click the icon for the General

Journal.

28. Describe several methods of accessing Payables reports. Are there any limitations on what reports you can view

from each of these options?

You can access Payables reports from the Suppliers or Vendors window, either from the Display tool or from

the Report menu in this window. You can also access Payables reports from the Report Centre Payables list

and from the Reports pane in the Payables module window. And finally, you can access these reports from

the Reports menu in any Home window.

You can access all Payables reports only from the Home window Reports menu. The reports that are printed

and not displayed – such as labels – and the Management Reports cannot be accessed from the other three

locations.

29. What happens when the date in a Purchases Journal date field is September 30, 2016, and your session date is

September 30, 2020?

In this situation, you will be unable to post the transaction because the date precedes the earliest transaction

date. Sage 50 will generate an error message about the invalid date (unless the fiscal period is longer than

two years and includes both dates). The error message will include the range of dates that you may use.

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3130. What will happen if you enter May 1, 2018, and May 31, 2020 as a report’s start and finish dates and your fiscal

year is from January 1, 2020, to December 31, 2020?

Sage 50 will display an error message about the invalid date when you try to display the report because May

1, 2016, the start date, precedes the fiscal start date. The error message will include the range of dates that

you may use.

31. What information will your reports include when your report are dated April 1 to April 30 and your fiscal year is

January 1 to December 31?

Your reports will only show the results of the transactions that occurred between April 1 and April 30.

32. What accounts are affected by incorrectly accepting a discount when paying a purchase invoice? How are they

affected? How would you make the correction for this error?

The bank account purchase discount. To correct this error prior to sending the cheque to the supplier adjust

the entry. If the supplier has the cheque then create an additional invoice for the purchase discount taken in

error and call the supplier information them of your underpayment.

33. What happens when you forget to add Sales Tax Details for General Journal entry with tax amount?

The tax collected or paid is under reported. Your tax remittance will be incorrect.

34. Why did Sage 50 not give you a warning about sales taxes in Chapter 3 and 4 when you entered tax amounts?

There was no warning because the tax accounts were not linked.

35. How do you change the default payment terms if the supplier changes the terms for a single purchase? For all

purchases? How do you change the default payment methods for a single purchase? For all purchases.

To change the default payment terms for one single purchase adjust the payments terms when recording the

invoice in the purchase ledger. To change all purchases select the supplier information set up and select

options and change the terms. To change the default payment method for a single purchase select the

payment method when recording the supplier invoice. The payment method is located at the top of the

invoice screen. To change the default payment method for all purchases select the Options tab in the supplier

record and change the payment method so the new one is reflected whenever the company is recording a

supplier invoice.

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32Review Case

On July 14, Ryan Fields purchased additional equipment for the nursery from a new supplier, Yarmouth

Supplies. Fields entered the purchase incorrectly as a purchase from Yardworks Inc. He did not discover the error

until two weeks later when the invoice was due. When he tried to make the payment in the Payments Journal,

Yarmouth Supplies did not appear on the supplier list, so he could not make the payment. At that time, Fields

was certain that he had entered the purchase but did not remember exactly how he had entered it

How can he find the original entry? In detail, describe how he would make the necessary corrections to complete

the payment.

If he already paid the invoice to the wrong supplier and the supplier cashed the cheque, what would you do to make

the corrections in Sage 50?

Locate the original invoice – date, amounts and accounts can be used to help identify the incorrect entry.

Display or print the Transaction Journal; examine it for any entries that may match the original invoice. If

there is more than one entry, compare the remaining invoices for the same date with these journal entries to

isolate the one that does not match and is incorrect. Reverse this incorrect entry in the Purchases Journal. Open

the Adjusting Invoice screen for the invoice and click the Reverse Invoice tool. Click Yes to confirm the

reversal. Next, make a Purchases Journal entry for the correct supplier and complete the payment.

If the invoice has been paid, it should still be reversed. You can create a credit note or reverse the payment

first and then reverse the invoice. In this case, you should notify the supplier who incorrectly received the

cheque, ask for the cheque to be destroyed and ask the bank to cancel or void the cheque.

Students should discuss the differences between adjusting and reversing entries and the situations in which

each is appropriate.

Using the Invoice Lookup feature, you can browse through copies of the invoices on-screen just as they were

posted. Invoice Lookup is used to locate a payment in Chapter 5. Other actions available from Lookup are

described in Chapter 12.

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33