Question 1

Describe how chart of accounts are used during the general ledger and financial reporting cycle.

Accepted Answer

The chart of accounts establishes the basis upon which reports can be generated;a fully flexible chart of accounts would include an indicator for every possible dimension that the transaction may conceivably need to be reported on.In practice,however,there is a trade off - the more digits a general ledger account number contains,the more likely data processing errors become.General ledger account codes are added to every transaction prior to it being processed into the subsidiary ledger during the operational cycles.The purpose of the general ledger is to extract these transactions and their associated account numbers,then summarise and transfer the data into the general ledger.A well-designed chart of accounts will support diverse reporting requirements while maintaining an acceptably low data entry error rate.Adoption of any alternative costing or reporting requirements,such as activity based costing,will increase the number of tags,or indicators,needed to code transactions accurately into the general ledger accounts.

Question 2

Which of the following reports is not produced by the general ledger and financial reporting cycle to support decision makers within the organisation?

Accepted Answer

A)  Profitability analysis for the organisation
B)  Cost management analysis
C)  Variance analysis for a division
D)  Aged accounts analysis D

Question 3

Which of the following controls can be applied to minimise the risk of under or over estimating revenue and expenditure amounts?

Accepted Answer

A)  Independent approval of budget estimates
B)  Ask operational managers to prepare budget estimates
C)  Link budget values to performance monitoring
D)  All of the options are correct. D

Question 4

Describe the difference between financial statements and management reports.

Accepted Answer

The answer of Describe the difference between financial statements and...

Question 5

Why budgets are created and how budgets are used to assess performance?

Accepted Answer

The answer of Why budgets are created and how budgets...

Question 6

Decisions relating to general journal entries would include consideration of:

Accepted Answer

A)  accounting standards,policies,and procedures
B)  timing differences for a given accounting period
C)  the need to incorporate data from external sources
D)  All of the options are correct.

Question 7

It is often necessary to create one-off reports from data held in the general ledger.Which of the following technologies would be useful for an end user to analyse extracted data and format a report?

Accepted Answer

A)  Crystal Reports
B)  Microsoft Excel
C)  Microsoft PowerPoint
D)  SAP Business Intelligence Solutions

Question 8

A well-designed chart of accounts will:

Accepted Answer

A)  support key reporting requirements while minimising or even eliminating data entry error
B)  support diverse reporting requirements while maintaining an acceptably low data entry error rate
C)  contain more digits in general ledger account number
D)  not include an indicator for every possible dimension that the transaction may conceivably need to be reported on

Question 9

Online banking is unlikely to be helpful:

Accepted Answer

A)  in terms of being able to monitor cash transactions more easily.
B)  in terms of being able to reconcile cash transactions more easily.
C)  for organisations that wish to automate bank reconciliations.
D)  in terms of allowing more in-depth analysis to be conducted by users or recipients of the data

Question 10

Which of the following statements regarding the finalisation of budgets is true?

Accepted Answer

A)  The finalisation of budges is a nondiscretionary process involving senior management only.
B)  The finalisation of budgets is an interactive process involving both senior management and operational staff.
C)  The finalisation of budgets is a nondiscretionary process involving both senior management and operational staff.
D)  The finalisation of budgets is an interactive process involving both senior management and middle management.

Question 11

The main objective of the general ledger and financial reporting cycle is to:

Accepted Answer

A)  Create a trial balance of various accounts as well as adjusted trial balances.
B)  Perform bank reconciliation to verify independently the balances of the cash-based general ledger accounts.
C)  Synthesise and report data that accurately represents business transactions and activities
D)  All of the options are correct.

Question 12

Which of the following is not a problem that can be caused directly by errors in financial statements?

Accepted Answer

A)  Inability to improve business process efficiencies
B)  Inability to access capital markets
C)  Inequitable increases in the cost of capital
D)  Incorrect market pricing of company shares

Question 13

Give examples of different budget levels and explain any deficiencies that may associate with these levels.

Accepted Answer

The answer of Give examples of different budget levels and...

Question 14

Which of the following is not required during the process of updating the general ledger?

Accepted Answer

A)  journal voucher
B)  accounts receivable data
C)  manufacturing overheads
D)  direct labour costs

Question 15

Financial reports generated in the general ledger and financial reporting cycle is used by:

Accepted Answer

A)  Managers within the organisation
B)  Investors
C)  External regulators
D)  All of the options are correct.

Question 16

A warning message is produced if budget estimate varies by more than a fixed percentage from last year's budget is an example of controlling for:

Accepted Answer

A)  Fraud
B)  Data entry errors when recording budgets
C)  Underestimation of revenue and expenditure amounts
D)  All of the options are correct

Question 17

Adoption of any alternative costing or reporting requirements,such as activity based costing,will:

Accepted Answer

A)  not affect the number of tags needed to code transactions accurately into the general ledger accounts
B)  decrease the number of tags needed to code transactions accurately into the general ledger accounts
C)  increase the number of tags needed to code transactions accurately into the general ledger accounts
D)  increase or decrease the number of tags needed to code transactions accurately into the general ledger accounts,depending on the actual costing method or reporting requirement adopted

Question 18

Unauthorised distribution of financial data cannot be controlled by:

Accepted Answer

A)  using the XBRL technology
B)  applying secure privacy settings on electronic reports
C)  using a document management system for reports containing sensitive data
D)  maintaining security profiles allowing read-only access to financial data at the individual level

Question 19

XBRL allows semantics to be embedded within strings of financial data.This does not mean:

Accepted Answer

A)  It is easier to build a database for accounting information systems
B)  More in-depth analysis can be conducted by users or recipients of the data
C)  Embedded tags that identify where separate pieces of data start and end within strings of data is inserted
D)  It is easier to exchange financial data.

Question 20

During the general ledger and financial reporting cycle:

Accepted Answer

A)  Budgets are created and agreed upon.
B)  Transactional level data is accumulated,summarised,adjusted and reported to internal users.
C)  Transactional level data is accumulated,summarised,adjusted and reported to external users.
D)  All of the options are correct.

Exam 13: Transaction Cycle The General Ledger and Financial Reporting Cycle