Chapter 16 – ‘General Ledger and Reporting System’

Question 1

1. From where do adjusting entries usually come? 
   a. treasurer
   b. controller
   c. various accounting cycle subsystems, such as sales order entry
   d. unit managers

Answer 1

b. controller (Correct. Adjusting entries are entered by the controller after the
trial balance has been prepared.)

Question 2

2. Preparing performance reports that contain data only about items that
   a specific organizational unit controls is an example of which of the
   following?  
   a. flexible budget system  
   b. responsibility accounting system
   c. closing the books
   d. management by exception

Answer 2

b. responsibility accounting system (Correct. This is the essence and purpose
of responsibility accounting.) 

Question 3

3. The definition of an XBRL element, including such information as
   whether its normal account balance is a debit or a credit, is found in
   which of the following?
   a. linkbase
   b. instance document
   c. schema
   d. style sheet

Answer 3

c. schema (Correct. The schema file in the taxonomy contains definitions of
XBRL elements.)

Question 4

4. Which of the following shows the implied causal linkages among the
   portions of the balanced scorecard? 
   a. Financial -> Internal -> Innovation and learning -> Customer
   b. Innovation and learning -> Internal -> Customer -> Financial
   c. Customer -> Financial -> Internal -> Innovation and learning
   d. Internal -> Customer -> Innovation and learning -> Financial

Answer 4

b. Innovation and learning -> Internal -> Customer -> Financial (Correct.
The theory underlying the balanced scorecard is that learning and innovation
will improve internal measures of performance, which will in turn improve
customer satisfaction, which will then be reflected in better financial
performance.)

Question 5

5. Which of the following XBRL documents contains the actual data
   values for a company’s net income for a particular year?
   a. style sheets  
   b. schema
   c. linkbases
   d. instance document

Answer 5

d. instance document (Correct. An instance document contains specific values
for financial statement elements.)

Question 6

6. The number of orders shipped per warehouse worker each day is a
   metric that would most likely appear in which part of the balanced
   scorecard?
   a. innovation and learning
   b. customer
   c. internal operations
   d. financial

Answer 6

c. internal operations (Correct.) 

Question 7

7. Which of the following is an important part of the audit trail?  
   a. journal vouchers
   b. flexible budgets
   c. trial balance  
   d. data warehouse

Answer 7

a. journal vouchers (Correct. Journal vouchers provide information
concerning the source of changes to the general ledger accounts.)

Question 8

8. An adjusting journal entry to record interest revenue that has been
   earned but not yet received is an example of which of the following?
   a. accrual
   b. deferral
   c. estimate  
   d. revaluation

Answer 8

a. accrual (Correct.)

Question 9

9. Which of the following is designed primarily to improve the efficiency
of financial reporting?
a. XML
b. XBRL
c. IFRS  
d. The balanced scorecard

Answer 9

b. XBRL(Correct. The eXtensible Business Reporting Language was
developed, in part, by accountants to facilitate business reporting.)

Question 10

10. Which of the following graph design principles is most important for
    ensuring that financial data is accurately interpreted?
    a. including a title that summarizes the point of the graph
    b. attaching data values to specific elements in the graph
    c. starting the y-axis of the graph at zero
    d. using different colors for different variables

Answer 10

c. starting the y-axis of the graph at zero (Correct. Starting the y-axis at zero
accurately depicts the magnitude of changes in the data.)