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ACCG2050 > General Ledger and External Reporting > Flashcards

General Ledger and External Reporting Flashcards

1
Q

What does the General Ledger and Financial reporting cycle do?

A

Summarises, adjusts, and reports on data from all the previous operational cycles

OBJECTIVE - to synthesise and report data

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2
Q

How does Online Banking support the General Ledger process?

A

Helpful for when preparing bank reconciliations (double checking the book keeping) because it links the organisation’s books and the bank statements.
Also automatically includes things non-specialists normally wouldn’t know about eg bank fees, interest charged

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3
Q

What is eXtensible Business Reporting Language (XBRL) and why is it beneficial?

A

A data standard used when generating financial reports

Allows data to be seamlessly transferred in multiple formats to multiple agencies and ensures the integrity of the underlying data

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4
Q

What data does the GL and Financial Reporting cycle extract?

A

Accounts Receivable
- asset
Accounts Payable
- liability
Payroll Data
- liability
Production Cycle Data

Overall these determine income and expenses

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5
Q

What are the four key activities in the GL and Financial Reporting cycle?

A
  1. Prepare budgets
  2. Update the general ledger
  3. Record GL adjustments
  4. Produce reports
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6
Q

What are the key decisions that need to be made?

A

Budgetary considerations
- are there adjustments required to meet targets?
Accounting policies and procedures

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7
Q

What are the two steps in preparing budgets (activity 1)?

A

Determine revenue and expenditure items

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8
Q

What are the two steps in updating the general ledger (activity 2)?

A

Extract and validate data
Post transactions

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9
Q

What are the two types of accounting recording?

A

Accrual basis - transaction happens
Cash flow basis - cash must change happens

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10
Q

What are budgeting and planning tools?

A

These tools enable organisation’s to build budgets efficiently and effectively by:
- allowing past performance to be analysed (spikes or trends)
- allowing forecasting and predicting future outcomes
- update data automatically
- allowing all departments to update a single centralised spreadsheet to enter budget information

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11
Q

What are the two steps in recording the GL adjustments (activity 3)?

A

Prepare adjustment journals
Post adjustment journals

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12
Q

What are the risks in preparing adjustment journals?

A

Errors in journal entries
- need documentation to prove and justify adjustments

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13
Q

What are the risks in producing reports?

A

Business sensitive information is revealed to unauthorised parties
If email
- can be intercepted or sent to the wrong person

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14
Q

What are the controls for producing reports?

A

Access Controls - Only people who have authorisation to manage the report can view and edit it

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15
Q

What are the KPIs for determining and recording budget estimates?

A

Budget variance
Budget preparation time
Complaints received regarding budget errors

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16
Q

What are the KPIs to validate and correctly transfer all relevant transactional data?

A

Number of data errors detected

17
Q

What are the KPIs for ensuring all adjusting journal entries are accurately prepared and independently authorised?

A
18
Q

What are the KPIs to ensure all reports are well designed and contain accurate and relevant data?

A
19
Q

What is eXtensible Business Reporting Language (XBRL)?

A

Used for digital financial reporting around the globe

XBRL adds electronic tags to each financial amount with a description of the data (ie metadata) that can be searched by web browsers (ie easily accessed)
Create, share, distribute

  • Code and bring meaning and context to financial information
  • Allows transparent and comparable data
  • Seamless sharing of information between accountants as all software can access and interpret/define information the same way (because of the electronic tags)
  • Analysts enables near real time financial analysis (compare companies across jurisdictions and local markets)
20
Q

What are the benefits of XBRL?

A
  • reduce costs
  • improve access
  • increase productivity
  • improve data quality and validity
  • reduce errors
  • more secure information transfer
  • automated software updates
21
Q

Who uses XBRL?

A

Stock exchanges
Companies
Governmental and regulatory agencies
Banks and banking regulators
Financial and investment analysts
Accountants

22
Q

What is the process of using XBRL?

A
  1. Store data
  2. Make a report
  3. Add tags
  4. Use reports
23
Q

What are the disadvantages of XBRL?

A

Evolving standards require conformity to changing standards
No requirement for auditors to provide assurance (they don’t have to audit XBRL - gives way to hackers)
Expensive transition

24
Q

What is integrated reporting?

A

A report that contains financial and non-financial information about a company’s performance (to tell a holistic store about the company)

25
Q

What are the 9 key elements of integrated reporting?

A

An organisational overview and external environment

Governance

Business Model

Risks and Opportunities

Strategy and Resource Allocation

Performance

Outlook

Basis of preparation and presentation

General reporting guidance

26
Q

What is TCFD?

A

Task Force on Climate-Related Financial Disclosures

Helps to drive consistent, voluntary disclosures by companies

27
Q

What are the 4 core elements of TCFD?

A

Governance - an organisation’s governance around climate-related risks and opportunities

Strategy - the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategies, and financial planning

Risk Management - processes used by the organisation to identify, assess, and manage climate related risks

Metrics - metrics and targets used to asses and manage relevant climate-related risks and opportunities

28
Q

Common reports produced in the general ledger and financial reporting cycle include:

a.
all of the options are correct.

b.
analysis of profitability potential to guide future investment decisions.

c.
profitability analysis for the organisation or a division.

d.
cost management analysis for decision-making.

A

a.
all of the options are correct.

29
Q

During the general ledger and financial reporting cycle:

a.
budgets are created and agreed upon.

b.
transactional level data is accumulated, summarised, adjusted and reported to external users.

c.
transactional level data is accumulated, summarised, adjusted and reported to internal users.

d.
all of the options are correct.

A

d.
all of the options are correct.

30
Q

Setting budget targets requires a balance between:

a.
the current financial situation of the organisation and the forecasted cash flow.

b.
the expenditure and the revenue of the organisation.

c.
all of the options are correct.

d.
what is desired in terms of performance and what is thought to be possible.

A

d.
what is desired in terms of performance and what is thought to be possible.

31
Q

The general ledger and financial reporting cycle initially extracts existing transactional data from:

a.
subsidiary ledgers.

b.
online banking facilities.

c.
operational reports.

d.
previous financial reports.

A

a.
subsidiary ledgers.

32
Q

What is budget variance analysis?

A

The difference between budget estimates and the actual results

33
Q

What are the differences between management reports and general-purpose financial statements?

A

Management reports
- used within the organisation
- much more detailed

General-purpose financial statements
- distributed externally (ie outside of the organisation) and freely available
- less detailed

34
Q

Typical budget decisions do not include:

a.
budget variance.

b.
budget breakdown.

c.
budget targets.

d.
budget level.

A

a. budget variance

ACCG2050 (15 decks)

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