Topic 8 - General Ledger & Reporting System Flashcards
What are the threats for updating the general ledger?
- Inaccurate updating of general ledger
2. Unauthorized journal entries
What are the steps in the General Ledger and Reporting System Process?
- Update general ledger
- Post adjusting entries
- Prepare financial statements
- Produce managerial reports
What are the controls for inaccurate updating of general ledger (updating general ledger)?
- Data entry processing integrity controls
- Reconciliations of accounts from subsidiary journals to general ledger accounts (e.g., accounts payable)
- Audit trail
What are the controls for unauthorized journal entries (updating general ledger)?
- Access controls
- Reconciliations and control reports
- Audit trail
What are the five types of adjusting entries?
- Accruals
- Deferrals
- Estimates
- Revaluations
- Corrections
What are accruals?
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)
What are deferrals?
Made at the end of the accounting period to reflect exchange of cash prior to performance of related event. (e.g., rent)
What are estimates?
Portion of expenses expected to occur over a number of accounting periods (e.g., depreciation)
What are revaluations?
Entries made to reflect differences between actual and recorded value of an asset or change in accounting principle
What are corrections?
Entries made to counteract effects of errors found in the general ledger
What are the threats in posting adjusting entries?
- Inaccurate adjusting entries
2. Unauthorized adjusting entries
What are the controls for inaccurate adjusting entries (posting adjusting entries)?
- Data entry processing integrity controls
- Spreadsheet error protection controls
- Standard adjusting entries
What are the controls for unauthorized adjusting entries (posting adjusting entries)?
- Access controls
- Reconciliations and control reports
- Audit trail creation and review
What are the threats for preparing financial statements & producing managerial reports?
- Inaccurate financial statements
- Fraudulent financial reporting
- Poorly designed reports and graphs
What are the controls for inaccurate financial statements (preparing financial statements)
- Processing integrity controls
- Use of packaged software
- Training and audits
What are controls for fraudulent financial reporting (preparing financial statements)?
- Audits
What are controls for poorly designed reports and graphs (producing managerial reports)?
- Responsibility accounting
- Balanced scorecard
- Training on proper graph design
What are the International Financial Reporting Standards (IFRS)?
Understand the systems implications due to the fact that the IFRS is different in financial reporting than General Accepted Accounting Principles (GAAP)
What is eXtensible Business Reporting Language (XBRL)?
Specifically used for communicating financial data (required by the Securities and Exchange Commission (SEC) if public company)
What is responsibility accounting?
Reporting results based upon managerial responsibilities in an organization.
What is a flexible budget?
Budget formula based upon level of activity (e.g., production levels)
What is a balanced scorecard?
Measures financial and non financial performance
Who is generally responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries?
treasurer
___________ are used to document entries made to update the general ledger.
Journal vouchers
What is a journal voucher file?
A file that stores all journal entries used to update the general ledger.
What is an audit trail?
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.
What is an instance document?
An XBRL file that contains tagged data.
What is taxonomy?
A set of XBRL files that defines elements and the relationships among them.
What is a schema?
An XBRL file that defines every element that appears in a specific instance document.
What are linkbases?
One or more XBRL files that define the relationships among elements found in a specific instance document.
What is a style sheet?
An XBRL file that provides instructions on how to display (render) an instance document on either a computer screen or printed report.
What is responsibility accounting?
A system of reporting financial results on the basis of managerial responsibilities within an organization.
What is a flexible budget?
A budget in which the amounts are stated in terms of formulas based upon actual level of activity.
What is a balanced scorecard?
A management report that measures four dimensions of performance: financial, internal operations, innovation and learning, and customer perspectives of the organization.
What XBRL document contains the actual data values for a company’s net income for a particular year?
instance document
From where do adjusting entries usually come?
controller
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
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.)
What is extension taxonomy?
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.
