Chapter 16: General Ledger And Reporting Systems

Front 1

Four steps in general ledger reporting

Back 1

1. update general ledger
2. post adjusting entries
3. Prepare financial statements
4. produce managerial reports

Front 2

Who updates the general ledger?

Back 2

The office of the treasurer

Front 3

general ledger and reporting system

Back 3

produce periodic reports but also supports online inquires for both internal and external users

Front 4

threats and controls

Back 4

threat:
-inaccurate or invalid GL data
-unauthorized disclosure or financial information
-loss or destruction of master data

control:
-use various processing controls to minimize risk of data input errors
-restrict access so only authorized employees can make changes to master data
-multifactor authentication and physical security controls
-employ the backup and disaster recovery procedures

Front 5

Control Procedure for Errors in updating the general ledger and generating reports

Back 5

validity checks, field check, zero balance check, completeness check, closed loop verification, creating standard adjusting entry file for recurring expenses like depreciation, sign check, run to run totals; reconciliation of accounts that do not match debits and credits and checking subsidiary accounts with general ledger and control reports like a general journal listing or a trial balance; audit trail

Front 6

journal voucher file

Back 6

contains the information that would be found in the general journal in a manual accounting system: the date of the journal entry, the accounts debited and credited, and the amounts
-a by-product not an input to the posting process

Front 7

trial balance

Back 7

a report that lists the balances for all general ledger accounts
-a form of reconciliation

Front 8

detective controls that should be used to identify inaccurate and unauthorized journal entries

Back 8

1. reconciliation and control reports
2. maintenance of an adequate audit trail

Front 9

audit trail

Back 9

a traceable path that shows how a transaction flows through the information system to affect general ledger account balances

Front 10

Who performs adjusting entries?

Back 10

Controller

Front 11

five types of adjusting entries and where they stored

Back 11

accruals, deferrals, estimates, revaluations, corrections

stored in: the journal voucher file

Front 12

accruals

Back 12

entries made at the end of the accounting period to reflect events that have occurred but for which cash as not yet been received or distributed
-wages payable and interest revenue earned

Front 13

deferrals

Back 13

entries made at the end of the period for exchanges of cash prior to the performance of the event that the cash was for. like prepaid rent expense

Front 14

estimates

Back 14

reflect a portion of expenses that occur over a number of accounting periods. like depreciation

Front 15

revaluations

Back 15

used to record differences between recorded and actual values. like changing inventory to reflect new accurate counts

Front 16

corrections

Back 16

used to fix errors in the general ledger

Front 17

threats and control for posting adjusting entries

Back 17

threat:
-inaccurate and unauthorized adjusting journal entries

control:
-create a standard adjusting entry file for reoccurring entries made each period, like depreciation expense

Front 18

step three: prepare financial statements

Back 18

"close the books" both monthly and annually

Front 19

Difference between GAAP and IFRS

Back 19

-Accounting for fixed assets
-Accounting for R&D costs
-IFRS does not permit the use of LIFO for accounting for inventory

Front 20

XBRL: Revolutionizing the reporting process

Back 20

eXtensible Business Reporting Language. a variation of xml specifically for transmitting financial data. makes it so companys do not have to write financial data in multiple formats. xbrl can be manipulated into different formats by the information seeker

Front 21

instance document

Back 21

contains the facts about specific financial statement line items, including their values, and contextual information such as the measurement (dollars, euros,pesos) and whether the value is for a specific point in time (BS item) or a period of time (I/S item)

-created by applying a taxonomy to a set of data

Front 22

taxonomy

Back 22

a set of files that defines the various elements and the relationship between them

-one part is a schema which is a file that contains the definitions of every element that could appear in an instance document

-accountant must select appropriate taxonomy

Front 23

linkbases

Back 23

define the relationship among elements includes:
1. reference
2. calculation
3. definition
4. presentation
5. label

Front 24

step four: Produce Managerial reports, final step

Back 24

produce a number of budgets to help managers plan and evaluate performance and performance reports

Front 25

responsibility accounting

Back 25

producing a set of correlated reports that break down the organization's overall performance by the specific subunits which can most directly control these activities

con: budget number is static and does not reflect unforeseen changes in the operating environment

Front 26

threats and controls for: Producing Managerial reports

Back 26

threats:
-poorly designed reports and graphs

controls:

Front 27

flexible budget

Back 27

the budgeted amounts vary in relation to some measure of organizational activity, mitigates such problems

Front 28

balanced scorecard

Back 28

a report that provides a multidimensional perspective of organization performance

-contains measures reflecting 4 perspectives:
1. organizational (financial)
2. customer
3. internal operations
4. innovation and learning

-shows goals and specific measurements that reflect performance in attaining those goals