Chapter 3 - Accounting

Question 1

The key processes in financial accouting are: (5)

Answer 1

1. general ledger accounting 2. accounts receivable accounting 3. accounts payable accounting 4. asset accounting 5. bank ledger accounting

Question 2

Describe the general ledger

Answer 2

It is used to record the financial impacts of business process steps. it contains much of the data needed for financial reporting

Question 3

What are the organizational data associated with FI

Answer 3

client company code business area

Question 4

what is a business area

Answer 4

an internal division of an enterprise that are used to define areas of responsibility or to meet the external reporting requirements of an enterprise segment. Financial statements are generated for each business area within an enterprise Pg 52 has image example

Question 5

What is a segment?

Answer 5

a segment is a division of an enterprise for which management monitors performance (revenue, costs, profitability, etc) separately from other segments

Question 6

What is a COA?

Answer 6

Chart of Accounts. It is an ordered listing of accounts that comprise a company’s general ledger.

Question 7

There are 3 types of COA. List them.

Answer 7

Operative COA country-specific COA group COA (used by multiple companies within to consolidate financial reporting

Question 8

The accounts in the operative COA create the country-specific COA. True or False

Answer 8

True the accounts in the operative COA are mapped to alternative accounts in country-specific charts of accounts. Companies create these alternative accounts to meet special country-specific reporting

Question 9

The accounts in the general ledger are defined based on the selected COA. True or false

Answer 9

True. The general ledger is an instantiation of the COA and can include some or all of the accounts

Question 10

COA account data includes:

Answer 10

a COA or client segment and a company code segment

Question 11

General ledger accounts are segmented by

Answer 11

organizational level

Question 12

The general ledger is an _____ of the COA

Answer 12

instantiation

Question 13

COA data includes what segments…

Answer 13

a COA or client segment and a company code segment

Question 14

What is the typical data for a COA account

Answer 14

Question 15

At the end of the year, any balances in a COA account that is of type balance sheet are…

Answer 15

carried forward into the same account

Question 16

At the end of the year, any balances in a COA account that is of type profit and losst are…

Answer 16

carried forward into different, specified accounts

Question 17

COA account groups look like this

Answer 17

Question 18

What does the field status group determine and what are the options?

Answer 18

the field status group determines both the screen layout for document entry and the status. Status options are: surpress, display, required, and optional

Question 19

Are customer accounts (which track the amoutns customers owe etc) kept in the general ledger

Answer 19

no - a subsidiary ledger or subledger is used

Question 20

What are reconciliation accounts

Answer 20

reconciliation accounts are general ledger accounts that consolidate data from a group of related subledger accounts, such as customers. For example tjhe reconiliation account for customer is accounts receivable)

Question 21

can you post directly to a reconciliation account?

Answer 21

no - data is posted to subledger accounts, at which point they are automatically psoted to the corresponding account. For example, when a copnay sells products to a customer on credit, the amount owed is oted in the customer’s subledger account and is also posted to the accounts receiveal reconciliation account

Question 22

Financial accounting documents record the impact (financial data) of a transaction step. Each document has a header section and a detail or line item section. Describe each.

Answer 22

Question 23

A financial accounting document has a document type - describe it.

Answer 23

2 character code that identifies the specific business process that generated the document.

Question 24

A financial accounting document, document type determines the document number range and the account type. T or F

Answer 24

True

Question 25

The financial accounting document details section as a posting key, describe it.

Answer 25

The debit or credit is indicated by a posting key, which is a 2 digit code that determines how a line item is posted

Question 26

The general ledger is based on the operating chart of accounts. T or F

Answer 26

True

Question 27

An organization can implement multiple ledgers in parallel and use each ledger for different purposes. T or F

Answer 27

True - this practice is called parallel accounting.

Question 28

An enterprise will implement one set of accounting principles for all companies (company code) in the enterprise. Discuss the number of ledgers allowed

Answer 28

there is exactly one leading ledger and other ledgers (nonleading) can also exist with the G/L

Question 29

Parallel Accounting - a company will have a leading ledger for consolidation and have nonleading ledgers based on local accounting standards or reporting requirements. T or F

Answer 29

True

Question 30

See image for the differences betweeen FI and CO

Answer 30

Question 31

Most the data used in management accounting is derived from financial accounting. T or F

Answer 31

True

Question 32

Management Accounting - to properly allocate and track costs, the organization is divided into cost centers. T or F

Answer 32

True

Question 33

Management accounting - Describe a cost center and the various ways it can be associated.

Answer 33

a cost center is associated with a location where costs are incurred. They can be associated with departments, with locations, or with individuals

Question 34

Management Accounting :: an order plus the cost center is called a cost object. T or F

Answer 34

True