Question 1

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

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Question 2

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

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Question 3

What are the key considerations when setting budget targets?

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Question 4

What are the strategic implications of the general ledger and financial reporting cycle?

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Question 5

What are the typical risks encountered during the production of management reports and what are the relevant common controls?

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Question 6

Which of the following is not helpful in reducing the risk of journal entries errors during the preparation of adjusting journals?
A)Independent approval of journal entries by senior accounting staff
B)Attach full working papers to support journal entry calculations
C)Document assumptions and algorithms relied on when calculating journal amounts
D)Performing a reasonableness check.

Accepted Answer

Performing a reasonableness check is actually helpful in reducing the risk of journal entry errors. Therefore, the other answer choices (A, B, and C) are all helpful measures to reduce the risk of error.

Question 7

Process performance should be measured relative to:
A)how cost-effective the process is
B)how efficient the process is
C)how well the process fits the overall business strategy
D)how well the process outcomes achieve the overall objectives of a relevant cycle

Accepted Answer

Process performance should ultimately be measured based on how well it achieves the overall objectives of a relevant cycle. While cost-effectiveness and efficiency are important factors to consider, they are not the ultimate goal of the process. The process also needs to be aligned with the overall business strategy to ensure that it contributes meaningfully to the success of the organization. However, the primary focus should be on ensuring that the process outcomes are meeting the relevant objectives, as this is the ultimate measure of success.

Question 8

Describe the difference between financial statements and management reports.

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Question 9

To reduce the risks of incomplete and inaccurate data during data extraction and validation in the process of updating general ledger,which of the following controls can be used?
A)Batch totals
B)Hash totals
C)Use ledger control accounts
D)All of the options are correct.

Accepted Answer

All of the options mentioned are controls that can be used to reduce the risks of incomplete and inaccurate data during data extraction and validation in the process of updating a general ledger. Batch totals help ensure that the total number of transactions processed matches the expected number. Hash totals, which are sums of non-financial data, help verify that a batch of transactions hasn't been altered. Ledger control accounts provide a way to verify the accuracy of detailed accounts by comparing them to a summary-level account.

Question 10

The main risk attached to producing financial reports is:
A)unauthorised distribution of financial reports
B)unauthorised access of financial reports
C)reporting incorrect data
D)reporting too many data

Accepted Answer

Reporting incorrect data presents the main risk attached to producing financial reports as it can lead to inaccurate financial decision-making, legal consequences, and damage to the company's reputation. Unauthorized distribution or access of financial reports is also a concern but can be mitigated through proper security measures. Reporting too many data is not a risk but rather a potential issue of information overload.

Question 11

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

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Question 12

Which of the following is NOT a KPI that can be used to measure the objective "To accurately and completely determine and record budget estimates"?
A)The time between budget creation and budget approval
B)Number of budget variances reported
C)Cycle time to create budgets
D)Operational manager complaints received regarding budget errors

Accepted Answer

The time between budget creation and budget approval is more related to the efficiency of the approval process rather than the accuracy and completeness of the budget estimates themselves.

Question 13

What are the considerations when planning budget breakdown?

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Question 14

Give at least three example KPIs to measure the objective "To ensure all adjusting journal entries are accurately prepared and independently authorised"

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Question 15

What are the common controls for controlling errors in journal entries during the preparation of adjustment journals?

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Question 16

Unauthorised distribution of financial data cannot be controlled by:
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

Accepted Answer

While XBRL technology can certainly be useful for organizing and exchanging financial data, it does not necessarily provide control over unauthorized distribution. The other options listed (B, C, and D) all involve measures that can help to secure financial data and limit access to it, making it more difficult for unauthorized individuals to obtain and distribute sensitive information.

Question 17

Which of the following is NOT a KPI that can be used to measure the objective "To validate and correctly transfer all relevant transactional data"?
A)Number of data errors detected
B)The volume of transactional data transferred
C)Reconciled balances in subsidiary ledger control accounts
D)Number of un-cleared transactions in suspense accounts

Accepted Answer

The volume of transactional data transferred is not directly related to the validation and correctness of the data transfer, but rather to the quantity of data moved. Choices A, C, and D are more directly related to the accuracy and validation of the data being transferred.

Question 18

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

Accepted Answer

The warning message produced in this scenario is an example of controlling for data entry errors when recording budgets. It is a preventative measure to catch and correct mistakes in budgeting before they become larger and more significant issues. While this control may indirectly help prevent fraud or underestimation of revenue and expenditure amounts, those are not its primary focus.

Question 19

Which of the following is NOT a KPI that can be used to measure the objective "To ensure all adjusting journal entries are accurately prepared and independently authorised"?
A)Number of erroneous adjustments detected
B)Level of unadjusted balances in asset and liability accounts
C)The number of authorisation performed
D)Degree of compliance with accounting policy

Accepted Answer

The number of authorizations performed does not directly measure the accuracy or independent authorization of adjusting journal entries. It simply quantifies how many authorizations occurred, without assessing the quality or correctness of the adjustments.

Question 20

Which of the following is NOT a KPI that can be used to measure the objective "To ensure all reports generated are well designed and contain relevant and accurate data"?
A)Number of complaints received from report users
B)Number of data errors identified in reports
C)Number of positive remarks received from report users
D)Number of sophisticated data tables in reports

Accepted Answer

The number of sophisticated data tables in reports is not a direct indicator of the quality or accuracy of report design or data. It is possible to have a well-designed report with relevant and accurate data without using sophisticated data tables. Complaints received from report users, number of data errors identified in reports, and positive remarks received from report users all directly relate to the quality and accuracy of reports.

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

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

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

What are the key considerations when setting budget targets?

What are the strategic implications of the general ledger and financial reporting cycle?

What are the typical risks encountered during the production of management reports and what are the relevant common controls?

Which of the following is not helpful in reducing the risk of journal entries errors during the preparation of adjusting journals?

Process performance should be measured relative to:

Describe the difference between financial statements and management reports.

To reduce the risks of incomplete and inaccurate data during data extraction and validation in the process of updating general ledger,which of the following controls can be used?

The main risk attached to producing financial reports is:

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

Which of the following is NOT a KPI that can be used to measure the objective "To accurately and completely determine and record budget estimates"?

What are the considerations when planning budget breakdown?

Give at least three example KPIs to measure the objective "To ensure all adjusting journal entries are accurately prepared and independently authorised"

What are the common controls for controlling errors in journal entries during the preparation of adjustment journals?

Unauthorised distribution of financial data cannot be controlled by:

Which of the following is NOT a KPI that can be used to measure the objective "To validate and correctly transfer all relevant transactional data"?

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:

Which of the following is NOT a KPI that can be used to measure the objective "To ensure all adjusting journal entries are accurately prepared and independently authorised"?

Which of the following is NOT a KPI that can be used to measure the objective "To ensure all reports generated are well designed and contain relevant and accurate data"?