Question 1

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

Reports from managers are not considered a major input to the general ledger and reporting system. Major inputs typically include summary entries from subsystems, adjusting entries, and records of financing and investing activities, not managerial reports.

Question 2

Describe three threats in the general ledger and reporting system and identify corresponding controls for each threat.

Accepted Answer

THREAT 1: Errors in updating the general ledger because of inaccurate/incomplete journal entries or posting of journal entries - Controls: (1)Input,edit,and processing controls over summary entries from subsystems.(a)Validity check over existence of general ledger accounts.(b)Field check over numeric data in amount field.(c)Zero-balance check ensures equality of debits and credits (d)Completeness test - all pertinent data are entered (e)Redundant data check - closed loop verification to see if on account numbers and descriptions,to ensure that the correct general ledger account is being accessed (f)Standard adjusting entry file for recurring entries - improves accuracy of the process (g)Sign check on debit and credit entries (h)Calculation of run-to-run totals can verify the accuracy of journal voucher batch processing (2)Reconciliation and control reports - can detect errors made during updating and processing;trial balances,clearing,and suspense accounts are examples (a)Balancing of control and subsidiary accounts (b)Control reports can help identify the source of errors in the general ledger update process - listings of journal vouchers and general journal entries will show entries posted to the general ledger and ensures equality of debits and credits (3)The audit trail - the path of transactions through the system-should be able to perform the following tasks: (a)Trace any transaction from its original source document to the general ledger;any other document or report using that data (b)Trace any item from a report or an output document to the general ledger and thence to the source document (c)Trace all changes in the general ledger balances from their beginning balance to their ending balance.
THREAT 2: Loss or unauthorized disclosure or alteration of financial data - Controls: (1)User IDs,passwords,and access controls should be used (2)Enforce segregation of duties (3)Adjusting entries only from the controller's area (4)Valid authorization for journal voucher submission.
THREAT 3: Loss or destruction of the general ledger - Controls: (1)Use of internal and external file labels to protect from accidental data loss (2)Make regular backup copies of the general ledger,one copy stored off-site (3)A good disaster recovery plan and (4)access and processing integrity controls to ensure confidentiality and accuracy of data transmitted to branch offices or externally.
THREAT 4: Poor performance - Controls: (1)XBRL, (2)redesign business processes,and (3)redesign metrics used to report results of business activities.

Question 3

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

D

Question 4

What control procedure(s)should be used to reduce the risk of the destruction of financial statement master data?
A)Multifactor authentication.
B)Backup and disaster recovery.
C)Encryption.
D)All of the above.

Accepted Answer

Backup and disaster recovery procedures are essential in reducing the risk of destruction of financial statement master data. It ensures that there is a secure and readily available copy of the data in case the original copies are lost, destroyed, or become unavailable due to technical or natural factors. Multifactor authentication and encryption are also good control procedures, but they do not directly address the risk of destruction of financial statement master data.

Question 5

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 with regard to how the various accounting subsystems update the general ledger 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 summary journal entries allow for easier consolidation of information and a more efficient updating process. The other statements are incorrect as they do not accurately reflect the typical updating process of the general ledger.

Question 6

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 be designed to meet the information needs of both internal and external users, therefore it should be able to produce regular periodic reports and respond to real-time inquiry needs. This choice addresses both needs. However, choice A is too broad and may not be necessary for all users, while choice B only addresses real-time needs and may not provide enough information for periodic reporting. Choice D is also important, but it only addresses one aspect of external user needs (investors and creditors).

Question 7

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)The budget department.
B)The CFO.
C)The treasurer.
D)The CEO.

Accepted Answer

The treasurer is generally responsible for managing the financing and investing activities of a company, which includes providing information to the accounting department to create the appropriate general ledger journal entries. The budget department may provide information related to budgets, but not necessarily financing and investing activities. The CFO and CEO may play a role in overseeing these activities, but it is not their primary responsibility to provide information to the accounting department.

Question 8

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 is typically used as a way to control the general ledger and ensure accuracy. Thus, it is an example of a general ledger control report.

Question 9

Identify one way "rainbow tables" are often used.
A)To discover plaintext passwords associated with a hash.
B)To integrate different tables into one,master table.
C)To perform a zero-balance check.
D)To ensure referential integrity of all the associated tables.

Accepted Answer

Rainbow tables are often used to discover plaintext passwords associated with a hash. They consist of precomputed tables designed for reversing cryptographic hash functions, which allows attackers to quickly find the original password from its hash value.

Question 10

Which of the following controls can minimize the threat of inaccurate or invalid general ledger data?
A)Training and experience in applying IFRS and XBRL.
B)Responsibility accounting.
C)Backup and disaster recovery procedures.
D)Restriction of access to general ledger.

Accepted Answer

Restriction of access to the general ledger can help minimize the threat of inaccurate or invalid data by ensuring that only authorized personnel can make changes to the ledger. This reduces the risk of intentional or unintentional errors or fraud. Training, responsibility accounting, and backup/disaster recovery procedures may also be important controls but may not directly address the issue of data accuracy in the general ledger.

Question 11

Which of the following controls can minimize the threat of poorly designed reports and graphs?
A)Training and experience in applying IFRS and XBRL.
B)Responsibility accounting.
C)Backup and disaster recovery procedures.
D)Restriction of access to general ledger.

Accepted Answer

Responsibility accounting assigns specific roles and responsibilities to individuals or departments for designing and reviewing reports and graphs. This can help ensure that the reports and graphs are well-designed and accurate, minimizing the risk of errors or misinterpretation. Training, backup procedures, and access restrictions may also be important controls, but they may not specifically address the issue of poorly designed reports and graphs.

Question 12

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

The general ledger and reporting system produces financial information that is made available to all users, whether they are internal or external to the organization. This includes financial statements that are provided to external users such as investors and creditors, as well as internal users such as managers and employees who need financial information for decision making. In addition, internal and external users can use inquiry processing to access the information produced by the general ledger and reporting system. Therefore, all of the choices in the question are correct.

Question 13

Which of the following controls can minimize the threat of loss or destruction of data?
A)Training and experience in applying IFRS and XBRL.
B)Responsibility accounting.
C)Backup and disaster recovery procedures.
D)Restriction of access to general ledger.

Accepted Answer

Backup and disaster recovery procedures ensure that a copy of the data is stored elsewhere in case of a loss or destruction of the original data source. This control helps to minimize the threat of data loss or destruction. The other options do not directly relate to data protection.

Question 14

What system privileges should an employee involved in the general ledger and reporting system be given?
A)General privileges to create,delete,update,or modify data.
B)No privileges permitting the creation,deletion,updating,or modification of data.
C)Only the specific privileges necessary to perform an employee's assigned duties.
D)Read-only privileges.

Accepted Answer

It is important to limit an employee's system privileges to the specific privileges necessary for them to perform their assigned duties. This helps to ensure that there is proper segregation of duties and reduces the risk of fraud or errors. Giving general privileges or read-only privileges may not be appropriate for an employee involved in the general ledger and reporting system.

Question 15

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 all part of the accounting subsystem, while issuance or retirement of debt and the purchase or sale of investment securities are typically initiated by the treasurer, making them treasurer-originated entries. Therefore, option B is the most appropriate answer. None of the other options accurately describe the nature of these transactions.

Question 16

If you believe not all adjusting entries were posted in the general ledger,you should prepare a general ledger control report listing journal vouchers in
A)numerical sequence.
B)chronological order.
C)general ledger account number order.
D)any order,since you have to review them all anyway.

Accepted Answer

Adjusting entries should be listed in numerical sequence in a general ledger control report. This helps in tracking and verifying each entry systematically, ensuring that all adjustments are accounted for and can be easily referenced.

Question 17

Explain the purpose of a journal voucher file.

Accepted Answer

The answer of Explain the purpose of a journal voucher...

Question 18

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.

Question 19

Which of the following controls can minimize the threat of inaccurate financial statements?
A)Training and experience in applying IFRS and XBRL.
B)Responsibility accounting.
C)Backup and disaster recovery procedures.
D)Restriction of access to general ledger.

Accepted Answer

Training and experience in applying IFRS (International Financial Reporting Standards) and XBRL (eXtensible Business Reporting Language) can help ensure that financial statements are accurately prepared in accordance with relevant reporting standards and guidelines. This can minimize errors and inconsistencies that could impact the accuracy of financial statements. Responsibility accounting, backup and disaster recovery procedures, and restriction of access to the general ledger can also help improve financial statement accuracy, but they may not directly address the risk of errors in financial reporting standards and practices.

Question 20

What control procedure(s)should be used to reduce the risk of unauthorized disclosure of the financial statements?
A)Multifactor authentication.
B)Physical security.
C)Encryption.
D)All of the above.

Accepted Answer

All of the mentioned control procedures should be used to reduce the risk of unauthorized disclosure of the financial statements. 
Multifactor authentication ensures that only authorized individuals with the appropriate credentials can access financial statements. 
Physical security ensures that physical copies of the financial statements are protected from unauthorized access. 
Encryption protects electronic copies of the financial statements from being read or accessed by unauthorized parties. Therefore, using all of the mentioned control procedures provides a comprehensive approach towards minimizing the risk of unauthorized disclosure of financial statements.

Quiz 16: General Ledger and Reporting System

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

Describe three threats in the general ledger and reporting system and identify corresponding controls for each threat.

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

What control procedure(s) should be used to reduce the risk of the destruction of financial statement master data?

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

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?

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

Identify one way "rainbow tables" are often used.

Which of the following controls can minimize the threat of inaccurate or invalid general ledger data?

Which of the following controls can minimize the threat of poorly designed reports and graphs?

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

Which of the following controls can minimize the threat of loss or destruction of data?

What system privileges should an employee involved in the general ledger and reporting system be given?

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.

If you believe not all adjusting entries were posted in the general ledger,you should prepare a general ledger control report listing journal vouchers in

Explain the purpose of a journal voucher file.

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

Which of the following controls can minimize the threat of inaccurate financial statements?

What control procedure(s) should be used to reduce the risk of unauthorized disclosure of the financial statements?