General ledger and reporting cycle

Question 1

Functions of GL and reporting system

Answer 1

Accumulates date
Classifies data by Chart of accounts
Records data in those accounts
Report to other systems

Question 2

How GL and RS (reporting system can support internal and external users?

Answer 2

GL and RS summarise data received from all cycles including revenue cycle, expenditure cycle, production cycle, payroll cycle and financing cycle for providing information to internal and external users

Question 3

what is budgeting?

Answer 3

Budgets offer feedback in the form of variances: actual results deviate from budgeted targets. 
Variances provide managers with: 
- early waring of problems
- a basis for performance evaluation
-a basis for strategy evaluation

Question 4

Controllability?

Answer 4

• Controllability is the degree of influence that a manager has over costs, revenues, or related items for which he/she is being held responsible.
• A controllable cost is any cost that is primarily subject to the influence of a given responsibility centre manager for a given period.

Question 5

Responsibility?

Answer 5

Responsibility accounting focuses on gaining information and knowledge, not only on control.

• Responsibility Center is a part, segment, or subunit of a organization whose manager is accountable for a specified set of activities
• Responsibility Accounting is a system that measures the plans, budgets, actions and actual results of each Responsibility Center

Question 6

The purpose of the financial statement fraud?

Answer 6

The purpose of financial statement fraud is to disguise the actual financial situation of the company and mislead stakeholders.

Question 7

two motivators for the financial statement fraud

Answer 7

• Greed - reporting a lower operating profit or reporting a higher operating profit in order to avoid taxes and receive a bonus.
• financial desperation - the company is in the serious financial problems –> fixed the financial statement in order to receive a loan from a bank.