Chapter 16—The General Ledger and Business Reporting (GL/BR) Process

TRUE/FALSE

1. The GL/BR process is an interacting structure of people, equipment, methods, and controls that is designed to accomplish both operations and information system functions.

ANS: T

2. The business reporting process comprises accumulating, classifying, and recording data, fueling the financial reporting, business reporting, and other reporting subsystems..

ANS: F

3. The general ledger process is concerned with preparing external financial statements, ensuring they conform to GAAP, generating Web-based forms of key financial statement and related business reporting via the Internet, and supporting the generation of both ad hoc and predetermined business reports.

ANS: F

4. A feeder process is any business process that accumulates event data that is then communicated to and processed by the general ledger/financial reporting (GL/BR) process.

ANS: T

5. The managerial reporting officer is responsible for reporting GAAP financial statements.

ANS: F

6. The financial reporting officer is primarily responsible for budgeting.

ANS: F

7. The controller notifies the business reporting process of investing and financing transaction activities

ANS: F

8. The chart of accounts is a list of all the accounts in the general ledger.

ANS: T

9. A performance report compares actual results with budgeted expectations.

ANS: T

10. Often, performance reports are part of a managerial reporting system known as a responsibility accounting system.

ANS: T11. A journal voucher is an internal source document used to notify the general

ledger to make an accounting entry.

ANS: T

12. The general ledger master data contains summarized information of all company event data.

ANS: T

13. An audit trail provides the linkages necessary to trace financial transactions forward through the general ledger/financial reporting (GL/BR) process.

ANS: F

14. The ordering of items in descending order, where each successive rank order is subordinate to the rank above is known as numerical coding.

ANS: F

15. The National Automated Accounting Research Service (NAARS) is an example of a public database service.

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368 Chapter 16

ANS: T

16. Balanced scorecard is methodology for assessing an organization's business performance via four components: (1) financial, (2) external business process, (3) vendors, and (4) innovation and improvement activities.

ANS: F

17. Business intelligence is the integration of statistical and analytical tools with decision support technologies to facilitate complex analyses of data warehouses by managers and decision makers.

ANS: T

18. XML is an XBRL-based language consisting of a set of tags that are used to unify the presentation of business reporting information into a single format that can be easily read by almost any software package and can be easily searched by web browsers.

ANS: F

19. XML is a generic web-based language that works on a set of user-defined tags to determine the presentation of information on a web site and to provide a key to the tags that can be applied by web users to easily search a given site.

ANS: T

20. Situations where two or more personal computer network users try to access the same information resources simultaneously are described as network contention or concurrency.

ANS: T

21. Call-up procedures are often used to authenticate the identity of users who access a network from remote locations through dial-in ports.

ANS: F

22. A diskless workstation contains no disk drive so no data can be written to floppy disks.

ANS: T

23. A network computer is one that consists of a processor and a connection to the server, but it has no storage capability within itself.

ANS: T

24. System access logs include reports of invalid access attempts.

ANS: T

25. The intent of Sarbanes Oxley is to protect the company by improving the accuracy and reliability of all disclosures.

ANS: FMULTIPLE CHOICE

1. The general ledger process comprises all of the following except:a. providing information for financial reportingb. serving the needs of managerial reportingc. classifying data by general ledger accountsd. none of the above

ANS: D

2. The business reporting process comprises all of the following except:a. preparing general purpose external financial statementsb. generating ad hoc and predetermined business reports for managementc. ensuring that the external financial statements adhere to GAAPd. none of the above

ANS: D

3. In contrast to the managerial reporting process, the financial reporting process prepares all of the following financial statements except:a. the balance sheetb. the income statementc. the standard costing variance report

The General Ledger and Business Reporting (GL/BR) Process 369d. the statement of owner equity changes

ANS: C

4. Typically, you would expect general ledger updates for financing and investing activities to be fed to the general ledger/financial reporting (GL/BR) process by:a. the controllerb. the treasurerc. the chief executive officer (CEO)d. one of the AIS feeder systemsANS: B

5. Typically, you would expect general ledger updates for periodic adjusting entries (e.g., for depreciation, accruals, and the like) to be fed to the general ledger/financial reporting (GL/BR) process by:a. the controllerb. the treasurerc. the chief executive officer (CEO)d. one of the AIS feeder systems

ANS: A

6. Which of the following individuals should possess the greatest knowledge of GAAP?a. general ledger accounting department managerb. budgeting department managerc. financial reporting officerd. managerial reporting officer

ANS: C

7. Which of the following usually would be responsible for preparing operating center budgets?a. general ledger accounting departmentb. budgeting departmentc. financial reporting officerd. operating department managers

ANS: D

8. Which of the following usually would be responsible for preparing operating center performance reports?a. general ledger accounting departmentb. budgeting departmentc. financial reporting officerd. managerial reporting officer

ANS: D

9. Normally, you would expect that operating event data updates would be sent to the general ledger/business reporting (GL/BR) process by:a. the controllerb. the treasurerc. the vice president of financed. various business feeder processes

ANS: D

10. Performance reports to various cost center, profit center, and investment center managers are usually sent by?a. the controllerb. the treasurerc. the managerial reporting officerd. the budgeting department

ANS: C

11. Actual and budgeted figures are usually sent to the managerial reporting officer bya. the controllerb. the treasurerc. the business reporting departmentd. the budgeting department

ANS: C

12. Actual and budgeted figures are usually sent to the budgeting department froma. the controllerb. the treasurerc. the business reporting department

370 Chapter 16d. the managerial reporting officer

ANS: C

13. Adjusted trial balance figures are usually sent from the business reporting department to the:a. the financial reporting officerb. the managerial reporting officerc. the business reporting departmentd. the budgeting department

ANS: A

14. Which of the following has responsibilities and expertise to preparing internal reports:a. the financial reporting officerb. the managerial reporting officerc. the business reporting departmentd. the budgeting department

ANS: B

15. Finalized budget figures are sent to the business reporting department bya. the financial reporting officerb. the budgeting departmentc. the business reporting departmentd. the managerial reporting officer

ANS: B

16. Although the controller usually provides adjustments as mandated by GAAP, who else might provide adjusting entry data?a. the financial reporting officerb. the budgeting departmentc. the business reporting departmentd. none of the above

ANS: A

17. Which of the following advises and assists the cost center, profit center, and investment center managers in preparing the budget?a. the financial reporting officer

b. the budgeting departmentc. the business reporting departmentd. none of the above

ANS: B

18. Which of the following could be a journal voucher?a. general ledger cash disbursements updateb. customer invoicec. receiving reportd. purchase requisition

ANS: A

19. Which of the following statements related to journal vouchers is false for most ERP systems?a. The person completing the adjustment will enter it directly into the computer.b. The voucher will be electronic.c. Business event updates from feeder systems may take the form of a journal voucher.d. To provide an adequate audit trail, a printed copy of journal vouchers is required to

capture the signature of the person making the entry.

ANS: D

20. Which of the following is most related to vertical information flow in the GL/BR process?a. treasury's financing functionsb. payrollc. order entry/salesd. budgetingANS: D

21. Which of the following is least likely to be part of the relevant environment of the general ledger/business reporting (GL/BR) process?a. the order entry/sales processb. the billing/accounts receivable/cash receipts processc. the purchasing/accounts payable/cash disbursements processd. the inventory processANS: D

The General Ledger and Business Reporting (GL/BR) Process 371

22. Inputs to a general ledger/business reporting (GL/BR) process typically include all of the following except:a. adjusting entry journal voucherb. adjusted trial balancec. finalized budgetd. GAAP-based financial statements

ANS: D23. In a logical DFD for the general ledger/business reporting (GL/BR) process,

which of the following processes normally would not update the general ledger master data?a. Record budget.b. Post events datac. Record adjustments.d. Prepare financial statements.

ANS: D

24. The general ledger master data does not contain:a. adjusting entry datab. customer numberc. totals extracted by event type from business event datad. a chart of accountsANS: B

25. Tracing back to individual business events that have been aggregated into account balances is done by means of a(n):a. electronic reference serviceb. general ledger accountc. audit traild. data dictionaryANS: C

26. The coding system typically used in the general ledger chart of accounts is:a. serial codingb. hierarchical codingc. block codingd. mnemonic codingANS: B

27. An account in the chart of accounts has the number 1113. Which of the following does the 3 likely represent?a. assetsb. current assetsc. cash accountsd. cash in bankANS: D

28. An account in the chart of accounts has the number 7111. Which of the following does the 7 likely represent?a. revenuesb. sales regionc. merchandise salesd. golf merchandise salesANS: A

29. Which of the following items is not one of the four components of the balanced scoreboard methodology?a. customersb. financialc. competitive environmentd. internal business processesANS: C

30. Which of the following statements related to eXtensible markup language is false?a. XBRL provides uniformity for users of financial statement and other business reporting

information in order to simplify delivery of the information via the web.b. XBRL is was created by SAP and is available for download free of charge via the web.c. XBRL enables users to download information to other software packages.d. XBRL is being incorporated into new versions of ERP software.ANS: B

31. When comparing a multiuser personal computer network with stand alone personal computers, the most important control issue related to the network is:a. physical protection of the equipmentb. minimizing the cost of redundant softwarec. ensuring the validity of users

372 Chapter 16d. providing adequate training of usersANS: C

32. Control plans for a networked multiuser environment address all of the following issues except:a. physical protection of the equipment and datab. minimizing the cost of add on modulesc. ensuring the validity of usersd. how to recover from a system failureANS: B

33. An organization is concerned about authenticating the identify of users who access the network from remote locations through dial-in ports. The best defense against unauthorized access is to utilize a(n):a. passwordb. automatic log-outc. call-back procedured. encryption

ANS: C

34. A diskless workstation has all of the following capabilities except:a. doing mathematical calculationsb. writing to a floppy diskc. printing a report or other outputd. downloading data from a central database

ANS: B

35. A network computer workstation has all of the following capabilities except:a. doing mathematical calculationsb. printing reportsc. saving to a hard diskd. downloading data from a central database

ANS: C

36. The personal computer networking term that refers to obtaining data from a host computer's database is:a. file server

b. network operating softwarec. downloadingd. front-end machine

ANS: C

37. A control procedure for workstation networks that includes reports of invalid access attempts is called:a. file and record lockingb. password protectionc. call-back proceduresd. system access logs

ANS: D

38. The intent of the Sarbanes Oxley Act is:a. to protect investors by improving the accuracy and reliability of corporate disclosuresb. to improve GAAPc. to increase the speed of disclosuresd. to strengthen the internal audit department

ANS: A

39. Which of the following control plans is directed at resolving contention between two network users?a. call-back proceduresb. diskless workstationsc. file and record lockingd. system access logs

ANS: C

40. What is the least effective method of ensuring that invalid users of an ERP can not download usable data files to a floppy disk.a. network computersb. diskless workstationsc. encryptiond. password

ANS: D

COMPLETION

The General Ledger and Business Reporting (GL/BR) Process 373

1. The is an interacting structure of people, equipment, methods, and controls that is designed to accomplish both operations and information system functions with the purpose of generating accounting and other reports.

ANS: general ledger and business reporting process (GL/BR)

2. The comprises accumulating, classifying, and recording data, fueling the financial reporting, business reporting, and other reporting subsystems..

ANS: general ledger process3. The is concerned with preparing external financial statements, ensuring they conform to GAAP, generating Web-based forms of key financial statement and related business reporting via the Internet, and supporting the generation of both ad hoc and predetermined business reports.

ANS: business reporting process

4. A(n) ____________________ process is any business process that accumulates event data that is then communicated to and processed by the general ledger/financial reporting (GL/BR) process.

ANS: feeder

5. The ____________________ officer possesses expertise in generally accepted accounting principles.

ANS: financial reporting

6. The ____________________ officer possesses expertise in preparing internal management reports.

ANS: managerial reporting

7. The ____________________ notifies the business reporting process of investing and financing transaction activities

ANS: treasurer

8. The ____________________ is a list of all the accounts in the general ledger.

ANS: chart of accounts

9. A(n) ____________________ report compares actual results with budgeted expectations.

ANS: performance or variance

10. Often, performance reports are part of a managerial reporting system known as a(n) ____________________ system.

ANS: responsibility accounting (reporting)

11. A(n) ____________________ is an internal source document used to notify the general ledger to make an accounting entry.

ANS: journal voucher

12. The _______________ data contains summarized information of all company event data.

ANS: general ledger master

13. A(n) ____________________ provides the linkages necessary to trace financial transactions backward or forward through the general ledger/financial reporting (GL/BR) process.

ANS: audit trail

14. The ordering of items in descending order, where each successive rank order is subordinate to the rank above is known as ____________ coding.

ANS: hierarchical

15. The National Automated Accounting Research Service (NAARS) is an example of a(n) ____________________ service.

ANS: public database16. is methodology for assessing an organization's business performance via four

components: (1) financial, (2) internal business process, (3) customers, and (4) innovation and improvement activities.

ANS: Balanced scorecard17. is the integration of statistical and analytical tools with decision support

technologies to facilitate complex analyses of data warehouses by managers and decision makers.

ANS: Business intelligence

18. is an XML-based language consisting of a set of tags that are used to unify the presentation of business reporting information into a single format.

ANS: eXtensible Business Reporting Language (XBRL)

19. is a generic web-based language that works on a set of user-defined tags to determine the presentation of information on a web site and to provide a key to the tags that can be applied by web users to easily search a given site.

ANS: eXtensible Markup Language (XML)

20. Situations where two or more personal computer network users try to access the same information resources simultaneously are described as network ____________________.

ANS: contention (or concurrency)

21. ____________________ are often used to authenticate the identity of users who access a network by requiring the user to type in a specific combination of letters and/or numbers .

ANS: Passwords

22. A(n) ____________________ contains no disk drive to enable the writing of data to floppy disks.

ANS: diskless workstation

23. A(n) ____________________ computer is one that consists of a processor and a connection to the server, but it has no storage capability within itself.

ANS: network

374 Chapter 16

24. ________________ include(s) reports of invalid access attempts.

ANS: System access logs

25. The intent of _____________________ is to protect investors by improving the accuracy and reliability of corporate disclosures.

ANS: Sarbanes Oxley