Deck 8: General Ledger, Financial Reporting, and Management Reporting Systems

Question 1

The Management Reporting System is a nondiscretionary system.

Answer 1

False

Question 2

Responsibility refers to an individual's obligation to achieve desired results.

Answer 2

True

Question 3

A report is said to have information content if it eliminates uncertainty associated with a problem facing the decision maker.

Answer 3

False

Question 4

Primary recipients of financial statement information are internal management.

Question 5

When evaluating decision alternatives,one option is to take no action.

Question 6

Standards are the basis for evaluating actual performance.

Question 7

The responsibility center file is primarily used by the Financial Reporting System.

Question 8

Management reporting is often called discretionary reporting because it is not mandated as is financial reporting.

Question 9

The control function entails evaluating a process against a standard and,if necessary,taking corrective action.

Question 10

The most common means of making entries in the general ledger is via the journal voucher.

Question 11

One benefit of the Management Reporting System is that it can alert management to delays in project implementation.

Question 12

Each account in the chart of accounts has a separate record in the general ledger master file.

Question 13

Designing an effective management reporting system does not require an understanding of the information managers need to deal with the problems they face.

Question 14

Individuals with access authority to general ledger accounts should not prepare journal vouchers.

Question 15

The manager of a cost center is responsible for cost control and revenue generation.

Question 16

A principle of responsibility accounting is that managers are responsible for controllable and uncontrollable costs.

Question 17

The journal voucher is the document that authorizes entries to be made to the general ledger.

Question 18

In most cases intangible decision criteria can be quantified.

Question 19

A firm with a wide span of control tends to have relatively more layers of management.

Question 20

An inventory out-of-stock report is an example of a programmed,on-demand report.

Question 21

Which report is not an output of the Financial Reporting System (FRS)?

A) variance analysis report
B) statement of cash flows
C) tax return
D) comparative balance sheet

Question 22

An income statement is an example of an XBRL instance document.

Question 23

If a manager delegates responsibility to a subordinate,he or she must also grant the subordinate authority to make decisions.

Question 24

Risk exposures in the General Ledger and Financial Reporting Systems include all of the following except

A) loss of the audit trail
B) unauthorized access to the general ledger
C) loss of physical assets
D) general ledger account out of balance with the subsidiary account

Question 25

Which steps in the Financial Accounting Process are in the correct sequence?

A) record the transaction, post to the ledger, prepare the adjusted trial balance, enter adjusting entries, prepare financial statements
B) record the transaction, prepare the unadjusted trial balance, record adjusting journal entries, record closing entries, prepare financial statements
C) record the transaction, post to the ledger, record adjusting entries, prepare the unadjusted trial balance, prepare financial statements
D) record the transaction, post to the ledger, prepare the adjusted trial balance, prepare financial statements, record closing entries

Question 26

The formalization of tasks principle suggests that management should structure the firm around the unique skills sets of key individuals.

Question 27

What type of data is found in the general ledger master file?

A) a chronological record of all transactions
B) the balance of each account in the chart of accounts
C) budget records for each account in the chart of accounts
D) subsidiary details supporting a control account

Question 28

Which best describes a batch process General Ledger System (GLS)

A) paper documents are eliminated
B) the general ledger master file is updated each night
C) there is a time lag between transaction processing and posting to the general ledger
D) no direct access or querying of the General Ledger is possible

Question 29

XBRL

A) is the basic protocol that permits communication between Internet sites.
B) controls Web browsers that access the Web.
C) is the document format used to produce Web pages.
D) was designed to provide the financial community with a standardized method for preparing
E) is a low-level encryption scheme used to secure transmissions in higher-level (HTTP) format.

Question 30

Financial statements are prepared from the

A) trial balance
B) adjusted trial balance
C) general ledger
D) general journal

Question 31

What account appears on the post closing trial balance?

A) income summary
B) machinery
C) rent expense
D) interest income

Question 32

Which statement is not true/

A) The journal voucher is the only source of input into the general ledger.
B) A journal voucher can be used to represent summaries of similar transactions or a single unique transaction.
C) Journal vouchers are not used to make adjusting entries and closing entries in the general ledger.
D) Journal vouchers offer a degree of control against unauthorized general ledger entries.

Question 33

With a limited work force and a desire to maintain strong internal control,which combination of duties performed by a single individual presents the least risk exposure?

A) maintaining the inventory ledger and recording the inventory journal voucher in the general ledger
B) recording the inventory journal voucher in the general ledger and maintaining custody of inventory
C) maintaining the cash disbursements journal and recording direct labor costs applied to specific jobs
D) preparing the accounts payable journal voucher and recording it in the general ledger

Question 34

Entries into the General Ledger System (GLS)can be made using information from

A) the general journal
B) a journal voucher which represents a summary of similar transactions
C) a journal voucher which represents a single, unusual transaction
D) all of the above

Question 35

XBRL taxonomies are classification schemes that are compliant with the XBRL
specifications to accomplish a specific information exchange.

Question 36

Which statement is not correct? The general ledger master file

A) is based on the firm's chart of account
B) contains a record for control accounts
C) is an output of the Financial Reporting System (FRS)
D) supplies information for management decision making

Question 37

Which situation indicates an internal control risk in the General Ledger/Financial Reporting Systems (GL/FRS)?

A) the employee who maintains the cash journal computes depreciation expense
B) the cash receipts journal voucher is approved by the Treasurer
C) the cash receipts journal vouchers are prenumbered and stored in a locked safe
D) the employee who maintains the cash receipts journal records transactions in the accounts receivable subsidiary ledger

Question 38

Operational control involves motivating managers at all levels to use resources,including materials,personnel,and financial assets,as productively as possible.

Question 39

An advantage of a batch General Ledger System (GLS)is that

A) separation between authorization and transaction processing is strictly enforced
B) the general ledger master file is recreated with each update
C) updates and reconciliation of transactions occur as a step within the transaction cycle
D) errors and out-of-balance conditions are identified at the end of the month

Question 40

Which statement is not correct?

A) the post-closing trial balance reports the ending balance of each account in the general ledger
B) one purpose of preparing the unadjusted trial balance is to ensure that debits equal credits
C) financial statements are prepared based on the unadjusted trial balance
D) the unadjusted trial balance reports control account balances but omits subsidiary ledger detail

Question 41

All of the following are characteristics of the strategic planning process except the

A) emphasis on both the short and long run.
B) review of the attributes and behavior of the organization's competition.
C) analysis of external economic factors.
D) analysis of consumer demand.

Question 42

All of the following are elements of operational control decisions except

A) determining the scope of the activity
B) setting operating standards
C) evaluating performance
D) taking corrective action when necessary

Question 43

All of the following concepts encourage goal congruence except

A) detailed information reporting at all management levels
B) authority and responsibility
C) formalization of tasks
D) responsibility accounting

Question 44

Long-range planning involves

A) planning the marketing and promotion for a product
B) presenting department heads with budgetary goals for the next year
C) preparing a work force utilization budget for the next quarter
D) deciding the optimum size of the firm

Question 45

What mechanism is used to convey to managers the standards by which their performance will be measured?

A) the responsibility report
B) the scheduled report
C) the budget
D) all of the above

Question 46

Which statement is not true?

A) authority refers to an individual's obligation to achieve desired results
B) if an employee is given the responsibility for a task, that employee should be given authority to make decisions within the limits of that task
C) the level of detail provided to an employee is a function of the employee's position with the firm
D) all of the above are true

Question 47

The level of management that makes tactical planning decisions is

A) top management
B) middle management
C) operations management
D) front-line management

Question 48

Which file has as its primary purpose to present comparative financial reports on a historic basis?

A) journal voucher history file
B) budget master file
C) responsibility file
D) general ledger history file

Question 49

Which statement is not true? Responsibility accounting

A) involves both a top-down and bottom-up flow of information
B) acknowledges that some economic events cannot be traced to any manager
C) creates a budget
D) compares actual performance with budget

Question 50

All of the following are elements of problem structure except

A) certainty
B) data
C) procedures
D) objectives

Question 51

An XBRL taxonomy:

A) is the document format used to produce web pages.
B) is the final product (report).
C) is a classification scheme.
D) is a tag stored in each database record.
E) none of the above is true.

Question 52

Which of the following management principles affects the management reporting system?

A) formalization of tasks
B) authorization
C) span of control
D) all of the above

Question 53

Which statement is not true? The manager's span of control

A) is narrow for routine and repetitive tasks
B) is related to the number of layers of management
C) affects the amount of detail provided to a manager
D) can affect employee morale and motivation

Question 54

The decision to enter a new market is an example of

A) strategic planning
B) tactical planning
C) management control
D) operational control

Question 55

Short-range planning involves

A) setting goals and objectives of the firm
B) planning the production schedule for the next quarter
C) planning the growth of the firm
D) deciding on the degree of diversification among the firm's products

Question 56

In contrast to tactical planning decisions,management control decisions,and operational control decisions,strategic planning decisions usually

A) are more focused
B) have a shorter time frame
C) are unstructured
D) have a high degree of certainty

Question 57

Which of the following statements is NOT true?

A) XML stands for eXperimental Markup Language.
B) XML is a is a meta-language for describing markup languages.
C) Unlike HTML, XML is capable of storing data in relational form.
D) Any markup language can be created using XML

Question 58

All of the following are examples of programmed reports except

A) cash flow reports for Division B
B) year-to-date local income tax payments made by all employees living in City X and working in City Y
C) inventory exception reports for Division G
D) equipment utilization reports for Plant M

Question 59

A fundamental principle of responsibility accounting is that

A) managers are accountable only for items they control
B) a manager's span of control should not exceed eight people
C) structured reports should be prepared weekly
D) the information flow is in one direction, top-down

Question 60

A characteristic of the Management Reporting System (MRS)is

A) the MRS operates in conformity with generally accepted accounting principles
B) it is a legal requirement that the MRS be installed and functioning properly
C) the MRS is developed by implementing SEC requirements
D) the MRS focuses on internal decision-making information

Question 61

Which of the following performance measures cannot result in dysfunctional behavior?

A) price variance
B) quotas
C) ROI
D) net income
E) all of the above can result in dysfunctional behavior

Question 62

How does the Management by Exception principle affect the Management Reporting System?

Question 63

Employees who are responsible for a task must have the __________________________ to make decisions within the limits of the responsibility delegated.

Question 64

Why is the audit trail necessary?

Question 65

__________________________ refers to the number of subordinates directly under a manager's control.

Question 66

Explain the phrase "span of control." What are the implications for the management reporting system of this principle?

Question 67

What is XML?

Question 68

Which of the following budgeting processes is least likely to motivate managers toward organizational goals?

A) setting budget targets at attainable levels
B) participation by subordinates in the budgetary process
C) use of management by exception
D) holding subordinates accountable for the items they control
E) having top management set budget levels

Question 69

The _______________________________ principle suggests that management should structure the firm around the work it performs rather than around individuals with unique skills.

Question 70

Why do many firms no longer use a general journal? What has taken its place?

Question 71

Describe at least three characteristics of strategic planning decisions and their information requirements.

Question 72

For reports to be useful they must have information content.Describe a reporting objective which gives reports information content.

Question 73

The difference between the actual performance and the standard is called the __________________________.

Question 74

List two duties that the general ledger clerk should not perform.

Question 75

List,in order,the steps in the Financial Accounting Process.

Question 76

What is information overload? How does it affect decision-making?

Question 77

Explain the three types of responsibility centers.

Question 78

Which of the following best describes a profit center:

A) authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply.
B) authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply, and significant control over the amount of invested capital.
C) authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply.
D) authority to provide specialized support to other units within the organization.
E) responsibility for combining the raw materials, direct labor, and other factors of production into a final product.

Question 79

What are the major exposures in the general ledger/financial reporting system?

Question 80

Explain the purpose and contents of the general ledger master file.