Topic 8 - General Ledger & Reporting System

Question 0

What are the threats for updating the general ledger?

Answer 0

1. Inaccurate updating of general ledger

2. Unauthorized journal entries

Question 1

What are the steps in the General Ledger and Reporting System Process?

Answer 1

1. Update general ledger
2. Post adjusting entries
3. Prepare financial statements
4. Produce managerial reports

Question 2

What are the controls for inaccurate updating of general ledger (updating general ledger)?

Answer 2

1. Data entry processing integrity controls
2. Reconciliations of accounts from subsidiary journals to general ledger accounts (e.g., accounts payable)
3. Audit trail

Question 3

What are the controls for unauthorized journal entries (updating general ledger)?

Answer 3

1. Access controls
2. Reconciliations and control reports
3. Audit trail

Question 4

What are the five types of adjusting entries?

Answer 4

1. Accruals
2. Deferrals
3. Estimates
4. Revaluations
5. Corrections

Question 5

What are accruals?

Answer 5

Made at the end of the accounting period to reflect events that have occurred but are not in the financial statements (e.g., wages payable)

Question 6

What are deferrals?

Answer 6

Made at the end of the accounting period to reflect exchange of cash prior to performance of related event. (e.g., rent)

Question 7

What are estimates?

Answer 7

Portion of expenses expected to occur over a number of accounting periods (e.g., depreciation)

Question 8

What are revaluations?

Answer 8

Entries made to reflect differences between actual and recorded value of an asset or change in accounting principle

Question 9

What are corrections?

Answer 9

Entries made to counteract effects of errors found in the general ledger

Question 10

What are the threats in posting adjusting entries?

Answer 10

1. Inaccurate adjusting entries

2. Unauthorized adjusting entries

Question 11

What are the controls for inaccurate adjusting entries (posting adjusting entries)?

Answer 11

1. Data entry processing integrity controls
2. Spreadsheet error protection controls
3. Standard adjusting entries

Question 12

What are the controls for unauthorized adjusting entries (posting adjusting entries)?

Answer 12

1. Access controls
2. Reconciliations and control reports
3. Audit trail creation and review

Question 13

What are the threats for preparing financial statements & producing managerial reports?

Answer 13

1. Inaccurate financial statements
2. Fraudulent financial reporting
3. Poorly designed reports and graphs

Question 14

What are the controls for inaccurate financial statements (preparing financial statements)

Answer 14

1. Processing integrity controls
2. Use of packaged software
3. Training and audits

Question 15

What are controls for fraudulent financial reporting (preparing financial statements)?

Answer 15

1. Audits

Question 16

What are controls for poorly designed reports and graphs (producing managerial reports)?

Answer 16

1. Responsibility accounting
2. Balanced scorecard
3. Training on proper graph design

Question 17

What are the International Financial Reporting Standards (IFRS)?

Answer 17

Understand the systems implications due to the fact that the IFRS is different in financial reporting than General Accepted Accounting Principles (GAAP)

Question 18

What is eXtensible Business Reporting Language (XBRL)?

Answer 18

Specifically used for communicating financial data (required by the Securities and Exchange Commission (SEC) if public company)

Question 19

What is responsibility accounting?

Answer 19

Reporting results based upon managerial responsibilities in an organization.

Question 20

What is a flexible budget?

Answer 20

Budget formula based upon level of activity (e.g., production levels)

Question 21

What is a balanced scorecard?

Answer 21

Measures financial and non financial performance

Question 22

Who is generally responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries?

Answer 22

treasurer

Question 23

___________ are used to document entries made to update the general ledger.

Answer 23

Journal vouchers

Question 24

What is a journal voucher file?

Answer 24

A file that stores all journal entries used to update the general ledger.

Question 25

What is an audit trail?

Answer 25

A path that allows a transaction to be traced through a data processing system from point of origin to output or backwards from output to point of origin.

Question 26

What is an instance document?

Answer 26

An XBRL file that contains tagged data.

Question 27

What is taxonomy?

Answer 27

A set of XBRL files that defines elements and the relationships among them.

Question 28

What is a schema?

Answer 28

An XBRL file that defines every element that appears in a specific instance document.

Question 29

What are linkbases?

Answer 29

One or more XBRL files that define the relationships among elements found in a specific instance document.

Question 30

What is a style sheet?

Answer 30

An XBRL file that provides instructions on how to display (render) an instance document on either a computer screen or printed report.

Question 31

What is responsibility accounting?

Answer 31

A system of reporting financial results on the basis of managerial responsibilities within an organization.

Question 32

What is a flexible budget?

Answer 32

A budget in which the amounts are stated in terms of formulas based upon actual level of activity.

Question 33

What is a balanced scorecard?

Answer 33

A management report that measures four dimensions of performance: financial, internal operations, innovation and learning, and customer perspectives of the organization.

Question 34

What XBRL document contains the actual data values for a company's net income for a particular year?

Answer 34

instance document

Question 35

From where do adjusting entries usually come?

Answer 35

controller

Question 36

Which of the follow show the implied causal linkages among the portions of the balanced scorecard? a) Financial --> Internal --> Innovation & Learning --> Customer b) Innovation & Learning --> Internal --> Customer --> Financial c) Customer --> Financial --> Internal --> Innovation & Learning d) Internal --> Customer --> Innovation & Learning --> Financial

Answer 36

b) Innovation & Learning --> Internal --> Customer --> Financial (The theory underlying the balanced scorecard is that learning & innovation will improve internal measures of performance, which will in turn improve customer satisfaction, which will then be reflected in better financial performance.)

Question 37

What is extension taxonomy?

Answer 37

A set of custom XBRL tags to define elements unique to the reporting organization that are not part of the standard generally accepted taxonomies for that industry.