Week 9 - The GL & Financial Reporting Cycle Flashcards
What is the purpose and objective of the GL and financial reporting cycle?
Summarises, adjusts and reports on data from all the previous
operational cycles.
The objective of this cycle is to synthesise and report
data in order to make comparisons and budgets.
What are the strategic implications of the GL and financial reporting?
- High-quality decision making requires good data and
comprehensible reports. - If management relies upon poor reports, decision-making
performance will be compromised, which can lead to eventual
business failure. - Errors in financial reporting distributed to external users can lead
to problems such as incorrect market pricing of company shares,
inequitable increases in the cost of capital, inability to access
capital markets and the potential for prosecution if corporate
laws are breached.
What are the 3 technologies underpinning the GL and FR cycle?
- ERP (enterprise resource planning): improves the integration of enterprise – wide data
- online banking
- XBRL (eXtensible Business Reporting Language): a data standard used when generating financial reports.
What transactional data does the GL and FR cycle extract from?
- accounts receivable
- accounts payable
- payroll data
- production cycle data
What are some key business decisions that need to be made?
- budgetary considerations: need to know company’s status in meeting the budget.
- accounting policies and procedures
- chart of accounts establishes the basis for report generation.
What are the 4 main activities in the GL & FR cycle?
- Prepare budgets
- Update the general ledger
- Record general ledger adjustments
- Produce reports
What are the 2 key activities in prepare budgets?
- Determine budget values
- Record budget details
What are the 2 key activities in update the general ledger?
- Extract and validate data
- Post transactions
What are the 2 key activities in record general ledger adjustments?
- Prepare adjustment journals
- Post adjustment journals
What are the 2 key activities in producing reports?
- Produce management reports
- Produce financial reports
True or False: The finalisation of budgets is an interactive process
involving both senior management and operational staff.
True.
True or False: The computer gives a warning message when budget
estimate significantly varies from last year’s budget. This
is an example of controlling fraud.
False
True or False: Unauthorised distribution of financial report data cannot
be controlled by using XBRL technology.
True
True or False: Reporting incorrect data is the only risk attached to
producing financial reports.
False
True or False: Hash totals can be used to reduce the risks of incomplete
and inaccurate data during data extraction and validation
in the process of updating general ledger.
True
