Question 1

The general ledger and financial reporting cycle initially extracts existing transactional data from:
A)Previous financial reports.
B)Operational reports.
C)Online banking facilities.
D)Subsidiary ledgers.

Accepted Answer

The general ledger and financial reporting cycle uses the data extracted from subsidiary ledgers, which are the sub-sets of the general ledger that contain detailed information for specific accounts such as accounts receivable, accounts payable, inventory, etc. The transactional data from these subsidiary ledgers is summarized and transferred to the general ledger, which is then used to prepare financial statements. Previous financial reports may be used as a reference, but they do not provide the initial data for the cycle. Operational reports and online banking facilities may provide useful information, but they do not directly contribute to the general ledger and financial reporting cycle.

Question 2

Which of the following must be taken into consideration before a general journal adjustment is authorised?
A)The need to incorporate data from external sources such as bank statements
B)Accounting policies and procedures
C)Accounting standards
D)All of the options are correct

Accepted Answer

All of the options listed must be taken into consideration before a general journal adjustment is authorised. External sources such as bank statements may reveal errors or omissions in the accounting records that need to be corrected through adjusting entries. Accounting policies and procedures provide guidance on how to record transactions and events in accordance with the organisation's internal controls and reporting requirements. Accounting standards establish principles and rules that must be followed to ensure that financial statements are accurate, reliable and comparable. Therefore, before authorising a general journal adjustment, it is important to consider all these factors to ensure that the adjustment is valid, appropriate and consistent with the organisation's accounting and reporting practices.

Question 3

Which of the following regarding the setting of budget targets is true?
A)When setting budget targets,more emphasis should be put on what is desired in terms of performance.
B)When setting budget targets,more emphasis should be put on what is thought to be possible.
C)When setting budget targets,there should be a balance between what is desired in terms of performance and what is thought to be possible
D)When setting budget targets,neither what is desired in terms of performance nor what is thought to be possible should be considered.

Accepted Answer

It is important to strike a balance between what is desired in terms of performance and what is thought to be possible while setting budget targets. This will ensure that the budget targets are challenging yet achievable. Putting too much emphasis on either one can result in unrealistic or unambitious targets.

Question 4

Transactional data is summarised by account code in the general ledger.The codes are then used in the reporting structure.What is the name given to the list of available codes?
A)List of account codes
B)Chart of accounts
C)Table of accounts
D)Reporting account codes

Accepted Answer

The name given to the list of available codes is Chart of Accounts. A chart of accounts is a systematic list of all ledger account names and their corresponding identification codes used in a company's accounting system. It provides a complete listing of every account in the accounting system, allowing for smooth daily and annual operations.

Question 5

An internet-based banking facility that allows organisations to manage and view their bank accounts online and conduct transactions such as transfers from those accounts is called:
A)Online reconciliation
B)Online payment
C)Online banking
D)Online financial management

Accepted Answer

Online banking is the internet-based facility that offers organisations the ability to manage and view their bank accounts online and conduct transactions like transfers from those accounts. Online payment, while related, typically refers only to the ability to make payments online, whereas online reconciliation and online financial management are broader terms that could encompass multiple financial activities beyond just banking.

Question 6

Typical budget decisions do not include:
A)budget variance
B)budget level
C)budget breakdown
D)budget targets

Accepted Answer

Budget variance is actually a typical budget decision that involves analyzing the differences between actual and expected expenses or revenues. B, C, and D are all common aspects of budget decisions where budget level refers to the overall amount of money designated for a particular purpose, budget breakdown focuses on how that amount is distributed among different categories of expenses, and budget targets are the specific objectives the budget aims to achieve.

Question 7

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

Accepted Answer

The statement that the finalisation of budgets is an interactive process involving both senior management and operational staff is true. Budgets are typically finalised through a collaborative process that involves multiple levels of management and staff, with input and feedback from across the organisation. This collaborative approach helps to ensure that budgets are realistic, achievable, and aligned with organisational goals and objectives.

Question 8

Common reports produced in the general ledger and financial reporting cycle include:
A)Profitability analysis for the organisation or a division
B)Cost management analysis for decision-making.
C)Analysis of profitability potential to guide future investment decisions
D)All of the options are correct.

Accepted Answer

All options are correct. The general ledger and financial reporting cycle produce various reports, including profitability analysis, cost management analysis, and analysis of profitability potential to guide future investment decisions.

Question 9

Which of the following reports is not produced by the general ledger and financial reporting cycle to support decision makers within the organisation?
A)Profitability analysis for the organisation
B)Cost management analysis
C)Variance analysis for a division
D)Aged accounts analysis

Accepted Answer

Aged accounts analysis is produced by accounts receivable and accounts payable cycles, not the general ledger and financial reporting cycle.

Question 10

Decisions relating to general journal entries would include consideration of:
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.

Accepted Answer

Decisions relating to general journal entries would include consideration of accounting standards, policies, and procedures to ensure compliance with regulations and consistency in accounting practices. Timing differences for a given accounting period would also need to be taken into account to accurately reflect the financial position of the company. Additionally, external data such as invoices and receipts may need to be incorporated into general entries. Therefore, all of the options are correct.

Question 11

Which of the following statements regarding budgets is true?
A)More aggregate budgets are more difficult to plan.
B)More aggregate budgets have sound usefulness during monitoring of performance due to the abundance of information they provide.
C)Budgets can be set at two levels.
D)Budgets can be set for each different type of revenue and expense for each division as contained in the chart of accounts.

Accepted Answer

Budgets can indeed be set for each different type of revenue and expense for each division as contained in the chart of accounts, allowing for detailed financial planning and monitoring.

Question 12

Who uses the data produced by the general ledger and financial reporting cycle?
A)All levels of management
B)Investors and analysts
C)Regulatory bodies
D)All of the options are correct

Accepted Answer

All levels of management, investors and analysts, and regulatory bodies use the data produced by the general ledger and financial reporting cycle.

Question 13

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

Accepted Answer

While XBRL does make it easier to organize and analyze financial data, it does not necessarily make it easier to build a database for accounting information systems. This is due to the complexity of implementing XBRL and the need for specialized software and expertise.

Question 14

Online banking is unlikely to be helpful:
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

Accepted Answer

Online banking typically provides basic transaction data and balances, but it may not offer the detailed analytical tools needed for in-depth financial analysis.

Question 15

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

Accepted Answer

The answer of Adoption of any alternative costing or reporting...

Question 16

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

Accepted Answer

All of the options mentioned can help in minimizing the risk of under or over estimating revenue and expenditure amounts. Independent approval of budget estimates ensures that the estimates are scrutinized by someone other than the preparer. Asking operational managers to prepare budget estimates can provide a better understanding of the costs involved in running the business. Linking budget values to performance monitoring can help in identifying any variances and taking corrective action.

Question 17

The degree of granularity of a budget refers to which of the following:
A)Budgeting by line item rather than in aggregate
B)Producing an annual budget or month by month
C)The amount of stretch built into the budget
D)Which level of management were involved in the estimates

Accepted Answer

The answer of The degree of granularity of a budget...

Question 18

Which of the following is not required during the process of updating the general ledger?
A)journal voucher
B)accounts receivable data
C)manufacturing overheads
D)direct labour costs

Accepted Answer

Journal vouchers are used to record transactions in the general ledger, making them essential for updating it. Accounts receivable data, manufacturing overheads, and direct labor costs are all examples of financial information that would be recorded in the general ledger through such transactions.

Question 19

Setting budget targets requires a balance between:
A)the current financial situation of the organisation and the forecasted cash flow
B)what is desired in terms of performance and what is thought to be possible
C)the expenditure and the revenue of the organisation
D)All of the options are correct.

Accepted Answer

The answer of Setting budget targets requires a balance between:
A)the...

Question 20

A well-designed chart of accounts will:
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

Accepted Answer

A well-designed chart of accounts should support diverse reporting requirements while maintaining an acceptably low data entry error rate. It balances the need for detailed reporting with the practicality of data management.

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

The general ledger and financial reporting cycle initially extracts existing transactional data from:

Which of the following must be taken into consideration before a general journal adjustment is authorised?

Which of the following regarding the setting of budget targets is true?

Transactional data is summarised by account code in the general ledger.The codes are then used in the reporting structure.What is the name given to the list of available codes?

An internet-based banking facility that allows organisations to manage and view their bank accounts online and conduct transactions such as transfers from those accounts is called:

Typical budget decisions do not include:

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

Common reports produced in the general ledger and financial reporting cycle include:

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

Decisions relating to general journal entries would include consideration of:

Which of the following statements regarding budgets is true?

Who uses the data produced by the general ledger and financial reporting cycle?

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

Online banking is unlikely to be helpful:

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

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

The degree of granularity of a budget refers to which of the following:

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

Setting budget targets requires a balance between:

A well-designed chart of accounts will: