Ch:16 General Ledger and Reporting System

Question 1

General ledger and reporting system process

Answer 1

• update general ledger
• posting adjusting entries
• prepare financial statements
• Produce managerial reports

Question 2

General ledger and reporting system threats and controls

Answer 2

Threats:
-Inaccurate or invalid general ledger data 
-loss or destruction of data 
Control:
-Data processing integrity controls 
-restriction of access to G/L

Question 3

Journal entries data entry processing integrity controls :

Answer 3

• validity check: ensures that G/L accounts exist
• field format check : ensures only numerical data is used
• zero-balance check: ensures total debits equals total credits
• completeness test: ensures all pertinent data for the JE is entered
• closed loop verification: ensures correct G/L is being accessed
• sign check: ensures balance is appropriate
• Run-totals: verify accuracy of journal batch processing

Question 4

Estimates

Answer 4

Portion of expenses expected to occur over a number of accounting periods (depreciation)

Question 5

Posting Adjusting entries threats and controls

Answer 5

Threats:
-inaccurate adjusting entries 
-unauthorized adjusting entries 
Controls
-data entry processing integrity controls 
-Access controls

Question 6

Prepare financial statements and produce managerial reports threats and controls

Answer 6

Threats :
-inaccurate financial statements 
-fraudulent financial reporting
Controls :
-processing integrity controls 
-use of packaged software

Question 7

managerial report and evaluating performance

Answer 7

• Responsibility accounting
• flexible budget
• balanced scorecard :measure nonfinancial and financial performance using 4 dimensions (financial, customer, internal operations , innovation and learning )
• Graphs