Module 5 - Accounting Information Systems And Controls: Part Two

Question 1

What are accounting processes?

Answer 1

Business processes that relate to an area of the financial statements

Question 2

Examples of accounting processes

Answer 2

Sales cycle

Purchases cycle

Payroll cycle

Stock cycle

Fixed assets

Month-end processes

Question 3

What are the phases of the stock cycle?

Answer 3

Phase 1: Receive Goods

Phase 2: Stock Movements

Phase 3: Stock Holding

Phase 4: Stock Valuation

Phase 5: Order Fulfilled and Despatched

Question 4

In the stock cycle, which department deals with the Receive Goods phase?

Answer 4

Warehouse

Question 5

In the stock cycle which department deals with the Stock Movements phase?

Answer 5

Warehouse

Question 6

In the stock cycle which department deals with the Stock Holding phase?

Answer 6

Warehouse

Question 7

In the stock cycle which department deals with the Stock Valuation phase?

Answer 7

Finance

Question 8

In the stock cycle which department deals with the Order Fulfilled and Despatched phase?

Answer 8

Warehouse

Question 9

What are the phases of the fixed asset cycle?

Answer 9

Phase 1: Identify the need for asset

Phase 2: Seek management or board approval

Phase 3: Order asset

Phase 4: Receive asset / transfer ownership

Phase 5: Receive invoice

Phase 6: Make payment

Question 10

What are the phases of the Payroll Cycle?

Answer 10

Phase 1: Work done and time recorded

Phase 2: Calculation of payroll liability

Phase 3: Payment of payroll liability

Question 11

What are the phases of Monthly Financial Reporting?

Answer 11

Phase 1: Month-end journals

Phase 2: Month-end reconciliations

Phase 3: Stock counts

Phase 4: Production of management accounts

Phase 5: Production of financial statements

Question 12

What can be used to indicate where stock is?

Answer 12

Goods Received Notes (‘GRNs’) and Goods Despatch Notes (‘GDN’)

Question 13

For stock count to be performed effectively, what procedures should management ensure?

Answer 13

Clear instructions

Stock movements ceased until completed

Stock count sheets provided

Counted by two members of staff

Signed by both counters

Marked once counted

Any differences investigated

Question 14

What is the Human Resources Cycle?

Answer 14

Involved the engagement and termination of personnel and the creation and maintenance of master data (personnel files)

Question 15

Is it important to segregate responsibilities of payroll and HR?

If so why?

Answer 15

Yes

To ensure no one individual has access rights to all data and procedures

Question 16

What documents are involved with the work done and time recorded phase in Payroll Phases?

Answer 16

Timesheets

Question 17

What Documentation is involved in the Calculation of payroll liability in Payroll Phases?

Answer 17

HR master file for hourly rate or salary

Question 18

What documentation is involved in the Payment of payroll liability phase in Payroll Phases?

Answer 18

Payroll listing / summaries

Payslips

Question 19

Organisations payroll transactions may include:

Answer 19

Salaries and hourly wages

Commissions

Bonuses

PAYE deductions

NI deductions

Pension contributions

Employee benefits (eg health insurance)

Question 20

What are the main elements of monthly financial reporting?

Answer 20

Month-end journals

Month-end reconciliations

Stock counts

Production of management accounts

Production of financial statements

Question 21

What are month end journals?

Some examples as well?

Answer 21

Transactions processed through the nominal ledger

Depreciation expense and acc dep’n

Cost of sales and stock

Accrued and prepaid expenses

Allowance for doubtful debts

Correction of errors

Question 22

Relevant objectives for month-end journals

Answer 22

Necessary journals are processed

Journals are accurate and agree to supporting documentation

Journal entries processed are genuine

Question 23

What should reconciliations be performed for

Answer 23

All control accounts

Question 24

Examples of key reconciliations

Answer 24

Trade debtors / receivables in nominal ledger to the aged debtors ledger

Trade creditors / payables in nominal ledger to the aged creditors ledger

Bank reconciliation

Payroll reconciliation

Question 25

Main reconciling issues arise due to what?

Answer 25

Timing differences

Manual entries

Question 26

Relevant objectives for reconciliations

Answer 26

All necessary are completed

All reconciling items are investigated and corroborated

Reconciliations are completed accurately and consistently

Question 27

Production of management accounts can be done automatically via reporting software, through the export of ledger data or by manual input to a spreadsheet?

Answer 27

Yes

Question 28

How regularly are financial statements produced?

Answer 28

Once a year (sometimes twice if half-yearly financial statements)

Question 29

Production of statutory accounts tend to be a more “what” process?

Answer 29

Manual