Chapter 3 - Accounting Flashcards
The key processes in financial accouting are: (5)
- general ledger accounting 2. accounts receivable accounting 3. accounts payable accounting 4. asset accounting 5. bank ledger accounting
Describe the general ledger
It is used to record the financial impacts of business process steps. it contains much of the data needed for financial reporting
What are the organizational data associated with FI
client company code business area
what is a business area
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
What is a segment?
a segment is a division of an enterprise for which management monitors performance (revenue, costs, profitability, etc) separately from other segments
What is a COA?
Chart of Accounts. It is an ordered listing of accounts that comprise a company’s general ledger.
There are 3 types of COA. List them.
Operative COA country-specific COA group COA (used by multiple companies within to consolidate financial reporting
The accounts in the operative COA create the country-specific COA. True or False
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
The accounts in the general ledger are defined based on the selected COA. True or false
True. The general ledger is an instantiation of the COA and can include some or all of the accounts
COA account data includes:
a COA or client segment and a company code segment
General ledger accounts are segmented by
organizational level
The general ledger is an _____ of the COA
instantiation
COA data includes what segments…
a COA or client segment and a company code segment
What is the typical data for a COA account
At the end of the year, any balances in a COA account that is of type balance sheet are…
carried forward into the same account
At the end of the year, any balances in a COA account that is of type profit and losst are…
carried forward into different, specified accounts
COA account groups look like this
What does the field status group determine and what are the options?
the field status group determines both the screen layout for document entry and the status. Status options are: surpress, display, required, and optional
Are customer accounts (which track the amoutns customers owe etc) kept in the general ledger
no - a subsidiary ledger or subledger is used
What are reconciliation accounts
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)
can you post directly to a reconciliation account?
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
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.
A financial accounting document has a document type - describe it.
2 character code that identifies the specific business process that generated the document.
A financial accounting document, document type determines the document number range and the account type. T or F
True
The financial accounting document details section as a posting key, describe it.
The debit or credit is indicated by a posting key, which is a 2 digit code that determines how a line item is posted
The general ledger is based on the operating chart of accounts. T or F
True
An organization can implement multiple ledgers in parallel and use each ledger for different purposes. T or F
True - this practice is called parallel accounting.
An enterprise will implement one set of accounting principles for all companies (company code) in the enterprise. Discuss the number of ledgers allowed
there is exactly one leading ledger and other ledgers (nonleading) can also exist with the G/L
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
True
See image for the differences betweeen FI and CO
Most the data used in management accounting is derived from financial accounting. T or F
True
Management Accounting - to properly allocate and track costs, the organization is divided into cost centers. T or F
True
Management accounting - Describe a cost center and the various ways it can be associated.
a cost center is associated with a location where costs are incurred. They can be associated with departments, with locations, or with individuals
Management Accounting :: an order plus the cost center is called a cost object. T or F
True
