Question 1

A listing of journal vouchers by numerical sequence,account number,or date is an example of
A) a general ledger control report.
B) a budget report.
C) a batch to be processed.
D) responsibility accounting.

Accepted Answer

A listing of journal vouchers by numerical sequence, account number, or date would provide a summary of transactions and help track changes in account balances. This type of report is an example of a general ledger control report, which is used to ensure that the general ledger is accurate and up-to-date.

Question 2

Adjusting entries that are made to reflect differences between the actual and recorded value of an asset or a change in accounting principle are called
A) reconciliations.
B) revaluations.
C) estimates.
D) accruals.

Accepted Answer

Revaluations are adjustments made to reflect differences between the actual and recorded value of an asset or to account for changes in accounting principles. These adjustments ensure that the financial statements present the fair value of assets and accurately reflect any changes in accounting methods.

Question 3

Depreciation expense and bad debt expense are examples of which type of adjusting journal entry?
A) deferrals
B) accruals
C) revaluations
D) estimates

Accepted Answer

Depreciation expense and bad debt expense are examples of adjusting entries that involve estimates, as they require management to estimate the useful life of an asset or the amount of receivables that will not be collected.

Question 4

When updating the general ledger,sales,purchases,and production are examples of ________ entries,and issuance or retirement of debt and the purchase or sale of investment securities are examples of ________ entries.
A) adjusting; controller originated
B) accounting subsystem; treasurer originated
C) adjusting; special journal
D) controller generated; special journal

Accepted Answer

Sales, purchases, and production are typical transactions that take place within the accounting subsystem, while the issuance/retirement of debt and the purchase/sale of investment securities are typically handled by the treasurer's office as part of managing the company's capital structure and investments. Therefore, these entries are treasurer originated, which falls under option B.

Question 5

Who should provide the adjusting entries in a well-designed general ledger and reporting system?
A) various user departments
B) the treasurer's area
C) the other major AIS subsystems
D) the controller's area

Accepted Answer

The controller's area is responsible for providing adjusting entries in a well-designed general ledger and reporting system. This ensures that the financial statements accurately reflect the financial position of the company. Other departments may help gather information, but the controller's area should be responsible for making sure the entries are accurate and appropriately recorded.

Question 6

Adjusting entries that are made to counteract the effects of errors found in the general ledger are called
A) accruals.
B) corrections.
C) deferrals.
D) estimates.

Accepted Answer

Adjusting entries made to counteract the effects of errors found in the general ledger are called corrections. Accruals, deferrals, and estimates are types of adjusting entries made for other reasons, such as recognizing revenue or expenses that have not yet been recorded or allocating prepaid expenses.

Question 7

The general ledger system of an organization should be designed to serve the information requirements of both internal and external users.This means that the system should support
A) producing expansive regular periodic reports to cover all information needs.
B) the real-time inquiry needs of all users.
C) producing regular periodic reports and respond to real-time inquiry needs.
D) access by investors and creditors of the organization to general ledger balances.

Accepted Answer

The general ledger system should serve the information requirements of both internal and external users by producing regular periodic reports and responding to real-time inquiry needs. This ensures that both types of users can obtain the information they need in a timely and efficient manner. The option of producing expansive regular periodic reports may not be necessary for all users and may result in unnecessarily large and complex reports. While providing access to investors and creditors is important, it is only one aspect of serving the information requirements of external users.

Question 8

Who generally is responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries?
A) budget department
B) controller
C) treasurer
D) chief executive officer

Accepted Answer

The treasurer is generally responsible for providing information about financing and investing activities to the accounting department as they are responsible for managing the organization's finances, including deciding how to finance operations and where to invest excess funds. The budget department is responsible for preparing the organization's budget, the controller oversees the accounting function, and the chief executive officer has overall responsibility for the organization but may not be directly involved in providing detailed financial information to the accounting department.

Question 9

Corrections are entries made to correct errors found in
A) all journals.
B) special journals.
C) the general ledger.
D) the financial statements.

Accepted Answer

Corrections are entries made to correct errors found in the general ledger. These adjustments are necessary to reflect accurate financial information in the financial statements. The special journals are used to record specific types of transactions, and errors found in them may be corrected through posting to the general ledger. Corrections are not made directly to the financial statements.

Question 10

Not all journal entries affect cash flow.Adjusting entries that reflect events that have already occurred,but have no effect on cash,are classified as
A) accruals.
B) deferrals.
C) revaluations.
D) corrections.

Accepted Answer

Accruals are adjustments made to reflect events that have already occurred but have no immediate effect on cash flow. These entries are used to recognize expenses or revenue that have not yet been recorded, but that are expected to be incurred or received in the future. For example, an accrual entry might be made for unpaid wages or salaries that have already been earned by employees, but have not yet been paid out.

Question 11

Financial statements are prepared in a certain sequence.Which statement is prepared last?
A) the adjusted trial balance
B) the income statement
C) the balance sheet
D) the statement of cash flows

Accepted Answer

The statement of cash flows is prepared last as it requires information from the income statement and balance sheet to show cash inflows and outflows.

Question 12

Identify the most correct statement with regard to how the various accounting subsystems update the general ledger.
A) Individual journal entries for each accounting subsystem transaction update the general ledger every 24 hours.
B) Summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger.
C) The controller or treasurer must approve accounting subsystem journal entries before any updating may occur.
D) Nonroutine transactions are entered into the system by the treasurer's office.

Accepted Answer

The most correct statement is that summary journal entries that represent the results of all transactions for a certain time period are used to update the general ledger. This is because it is more efficient and accurate to update the general ledger with summarized information, rather than individual entries. Also, the controller or treasurer may need to approve the summary entries before they are posted to the general ledger.

Question 13

Which item below is not considered a major input to the general ledger and reporting system?
A) summary entries from the major subsystems
B) reports from managers
C) adjusting entries
D) financing and investing activities

Accepted Answer

While reports from managers may inform decision-making and planning, they are not considered a major input to the general ledger and reporting system. The other items listed (summary entries from subsystems, adjusting entries, financing and investing activities) all directly impact the financial statements and are necessary inputs for accurate reporting.

Question 14

Identify the adjusting entry that is made at the end of an accounting period to reflect an exchange of cash prior to the performance of a related event is classified as a(n)
A) accrual entry.
B) deferral entry.
C) revaluation entry.
D) correcting entry.

Accepted Answer

This scenario describes a deferral entry, where cash is exchanged before an event is performed, and an adjusting entry is made at the end of the period to recognize the event and allocate the cash exchange accordingly. A accrual entry would be made to recognize revenue or expenses that have been earned or incurred but not yet recorded. A revaluation entry would involve adjusting the value of an asset or liability based on market conditions. A correcting entry would be made to fix an error in a previous entry.

Question 15

Recording interest earned on an investment is an example of which type of adjusting journal entry?
A) accrual entry
B) deferral entry
C) revaluation entry
D) correcting entry

Accepted Answer

Recording interest earned on an investment before it is received involves accruing the revenue, making it an example of an accrual entry.

Question 16

Which of the following are used to document entries made to update the general ledger?
A) general journal
B) subsidiary journal
C) subsidiary ledgers
D) journal vouchers

Accepted Answer

The answer of Which of the following are used to...

Question 17

Adjusting entries that are made to recognize revenue that has been received but not yet earned are classified as
A) estimates.
B) deferrals.
C) accruals.
D) revaluations.

Accepted Answer

Adjusting entries that recognize revenue received but not yet earned are known as deferrals. This is because the revenue has not yet been earned, so it cannot be recognized as revenue until a later date. Deferrals are a type of temporary account that are adjusted at the end of an accounting period to reflect the true amount of revenue that has been earned.

Question 18

Which of the following user groups generally receive information produced by the general ledger and reporting system?
A) internal users
B) external users
C) inquiry processing by internal or external users
D) all of the above

Accepted Answer

Information produced by the general ledger and reporting system can be utilized by internal users such as management, employees, and the board of directors for decision-making purposes. The financial statements generated by the system are also used by external users such as investors, creditors, and regulatory agencies. Additionally, both internal and external users may utilize the inquiry processing capability of the system to access specific financial information. Therefore, all of the above choices apply.

Question 19

Immediately after the adjusting entries are posted,the next step in the general ledger and reporting system is to prepare
A) an adjusted trial balance.
B) closing entries.
C) financial statements.
D) an unadjusted trial balance.

Accepted Answer

The adjusted trial balance is prepared after adjusting entries are posted to ensure that all accounts are updated with the correct balances. This adjusted trial balance serves as the basis for preparing the financial statements. Therefore, option A is the correct choice. Closing entries are prepared after financial statements are prepared, which eliminates option B. Option C is the outcome of the preparation of the adjusted trial balance, so it cannot be the immediate next step. Option D is irrelevant and unnecessary at this point since the adjusted trial balance has already been prepared, making it incorrect.

Question 20

The general ledger and reporting system consists of the ________ involved in ________ the general ledger and ________ reports.
A) business transactions; updating; processing
B) data processing; business transactions for; printing
C) information processing; updating; creating
D) business transactions; data processing; preparing

Accepted Answer

The general ledger and reporting system involves information processing to update the general ledger and create reports, which is accurately described in option C. Option A and D are partially correct but do not cover all the aspects of the system, while option B is incorrect as it suggests the system is only involved in processing data and printing business transactions.

Quiz 16: General Ledger and Reporting System

A listing of journal vouchers by numerical sequence,account number,or date is an example of

Adjusting entries that are made to reflect differences between the actual and recorded value of an asset or a change in accounting principle are called

Depreciation expense and bad debt expense are examples of which type of adjusting journal entry?

When updating the general ledger,sales,purchases,and production are examples of entries,and issuance or retirement of debt and the purchase or sale of investment securities are examples of entries.

Who should provide the adjusting entries in a well-designed general ledger and reporting system?

Adjusting entries that are made to counteract the effects of errors found in the general ledger are called

The general ledger system of an organization should be designed to serve the information requirements of both internal and external users.This means that the system should support

Who generally is responsible for providing the accounting department with information about financing and investing activities to create the appropriate general ledger journal entries?

Corrections are entries made to correct errors found in

Not all journal entries affect cash flow.Adjusting entries that reflect events that have already occurred,but have no effect on cash,are classified as

Financial statements are prepared in a certain sequence.Which statement is prepared last?

Identify the most correct statement with regard to how the various accounting subsystems update the general ledger.

Which item below is not considered a major input to the general ledger and reporting system?

Identify the adjusting entry that is made at the end of an accounting period to reflect an exchange of cash prior to the performance of a related event is classified as a(n)

Recording interest earned on an investment is an example of which type of adjusting journal entry?

Which of the following are used to document entries made to update the general ledger?

Adjusting entries that are made to recognize revenue that has been received but not yet earned are classified as

Which of the following user groups generally receive information produced by the general ledger and reporting system?

Immediately after the adjusting entries are posted,the next step in the general ledger and reporting system is to prepare

The general ledger and reporting system consists of the involved in the general ledger and reports.