Question 1

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 that has been received but not yet earned are classified as deferrals because the revenue has not yet been earned and should not be recorded as income until the earnings process is complete.

Question 2

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 3

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 information for all types of users, including internal and external users as well as those performing inquiry processing. Therefore, the correct answer is D, all of the above.

Question 4

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

Once the adjusting entries are posted, the next step is to prepare an adjusted trial balance. This trial balance lists all the accounts and their balances after adjusting entries have been made. It is used to ensure that the accounting equation (assets = liabilities + equity) still holds true after adjustments have been made. The adjusted trial balance is then used to prepare financial statements and closing entries.

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 should provide the adjusting entries in a well-designed general ledger and reporting system. The controller's area is responsible for ensuring the accuracy and completeness of financial statements and therefore, is best equipped to make the necessary adjustments to the general ledger. Other areas may provide input, but the controller's area should oversee and approve any adjusting entries made.

Question 6

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 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 be designed to serve both internal and external users, which means that it should support producing regular periodic reports and respond to real-time inquiry needs of all users. Option A is not feasible as it suggests producing expansive regular periodic reports to cover all information needs, which can be overwhelming and unnecessary for some users. Option B is also not feasible as not all users may require real-time inquiry access, and it may not be practical for the system to constantly respond to real-time inquiries. Option D is incorrect as it only addresses the access of investors and creditors to general ledger balances, which is a subset of the overall information needs of the organization.

Question 8

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 adjusting entries made for other reasons, such as recognizing revenue or expenses that have been earned or incurred but not yet recorded, or estimating the amount of an expense or liability.

Question 9

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 an example of a general ledger control report. This report ensures that all journal entries have been properly recorded and provides a summary of the company's financial transactions. The report can be sorted by journal voucher number, account number, or date to provide different views of the information.

Question 10

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

Accrual entries are made to record revenue or expenses that have been earned but not yet received or paid. Recording interest earned on an investment would fall under this category as the interest has been earned but not yet received, therefore an accrual entry is required.

Question 11

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 would be recorded in an accounting subsystem such as accounts receivable, accounts payable, and inventory. Issuance or retirement of debt and the purchase or sale of investment securities are typically transactions initiated by the treasurer or financial management, and would be recorded as treasury transactions. Neither adjusting entries nor specific journals like special journals would be appropriate terms to describe these entries. The closest answer choice is B, which correctly identifies these as accounting subsystem entries and treasurer originated entries, respectively.

Question 12

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 type of adjustment is known as a deferral entry, which involves recognizing revenue or expenses after cash has been exchanged but before the related event has occurred.

Question 13

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

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 individual journal entries for each transaction would be too numerous and time-consuming. Nonroutine transactions may also need to be approved by the controller or treasurer before being entered into the system.

Question 14

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 managing the organization's finances and investments, so they would be in the best position to provide information to the accounting department for creating the appropriate general ledger journal entries. The budget department may provide information on expected expenses and revenue, but not necessarily on financing and investing activities. The controller may oversee the accounting department, but may not have direct knowledge of the organization's financing and investing activities. The chief executive officer may be involved in high-level decision-making, but may not have detailed knowledge of daily finances and investments.

Question 15

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 answer of Financial statements are prepared in a certain...

Question 16

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 17

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 adjusting entries that reflect events that have already occurred but have no effect on cash. These can include expenses that have been incurred but not yet paid or revenue that has been earned but not yet received in cash. Deferrals, on the other hand, occur when cash has been received or paid, but the corresponding revenue or expense has not yet been earned or incurred. Revaluations and corrections are not types of adjusting entries, but rather refer to adjustments made to correct errors or update values.

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, which includes updating the general ledger and creating reports. Choice A is incorrect because it only mentions business transactions and updating, but does not include processing reports. Choice B is incorrect because it mentions data processing but not information processing, and it implies that business transactions are only for printing purposes. Choice D is incorrect because it only mentions business transactions and preparing reports, but does not include the actual updating of the general ledger.

Question 19

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

The answer of Depreciation expense and bad debt expense are...

Question 20

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 made to the general ledger to ensure the accuracy of the financial statements. Corrections made in specialized journals (such as sales or purchases) are eventually posted to the general ledger, so they would also be considered corrections to the general ledger. However, not all corrections are made in special journals, and corrections to the financial statements are a result of the corrections made in the general ledger. Therefore, the best answer is C.

Quiz 16: General Ledger and Reporting System

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

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

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

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

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

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

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

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

Recording interest earned on an investment is an example 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.

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)

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

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

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

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

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

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

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

Corrections are entries made to correct errors found in