Question

1. 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 2. Online banking is unlikely to be helpful: a b. C. d. in terms of being able to monitor cash transactions more easily. in terms of being able to reconcile cash transactions more easily. for organisations that wish to automate bank reconciliations. in terms of allowing more in-depth analysis to be conducted by users or recipients of the data 3. Which of the following technologies can be used in the general ledger and financial reporting cycle? b. C. ERP and XBRL ERP and CAD RFID and XBRL CAD and RFID 4. High-quality decision-making requires: a b. c. d. valid, timely, accurate, and complete data and comprehensible reports valid, timely, accurate, and complete data good data and comprehensive reports comprehensive data and comprehensible reports 5. Which of the following statements regarding reports is true? b. Reports should contain as many data as possible so that readers are able to understand the reports thoroughly. Poorly arranged data in reports can be misleading. Simple issues such as selecting the appropriate font size or column heading are unlikely to impact on the understandability of a report. All of the options are correct. 6. Vendor invoices from the expenditure cycle flow into the general ledger and financial reporting cycle through: a. b. C. d. the purchases journal directly the purchases journal and then through the accounts payable subsidiary ledger the cash disbursements journal directly the accounts payable subsidiary ledger and then through the cash disbursements journal 7. The main objective of the general ledger and financial reporting cycle is to: a. b. Create a trial balance of various accounts as well as adjusted trial balances. Perform bank reconciliation to verify independently the balances of the cash-based general ledger accounts Synthesise and report data that accurately represents business transactions and activities All of the options are correct. 8. Which of the following is not a problem that can be caused directly by errors in financial statements? a. b. Inability to improve business process efficiencies Inability to access capital markets C. d. Inequitable increases in the cost of capital Incorrect market pricing of company shares 9. Which of the following regarding the setting of budget targets is true? When setting budget targets, more emphasis should be put on what is desired in terms of performance. When setting budget targets, more emphasis should be put on what is thought to be possible. When setting budget targets, there should be a balance between what is desired in terms of performance and what is thought to be possible When setting budget targets, neither what is desired in terms of performance nor what is thought to be possible should be considered. 10. A warning message is produced if budget estimate varies by more than a fixed percentage from last year's budget is an example of controlling for: b. C. Fraud Data entry errors when recording budgets Underestimation of revenue and expenditure amounts All of the options are correct

Answer 1

Solutions:-

Ans. 1- option (d)

Explanation:- Before posting an adjustment in form of a journal entry the impact of all the factors including information obtained from external sources, accounting principles, policies and accounting standards has to be evaluated. Therefore, option d is correct.

Ans. 2- option (d)

Explanation: Out of the given choices option d is most appropriate as online banking alone is unlikely to help the users of data in conducting in depth analysis as other supporting documentation would also be required for conducting in depth analysis.

Ans. 3 option (a)

Explanation: ERP provides customised solution to all the accounting and business processes at one go. Further XBRL (Extensible Business Reporting Language) is an internationally accepted form for data integrity and business reporting purposes. Therefore, ERP and XBRL can be used in general ledger and financial reporting cycle.

Ans. 4 option (a)

For high quality decision making all the attributes stated in choice a that is valid, timely, accurate and complete data and comprehensible reports are required. All other choices list few combinations of few attributes required for high quality decision making. Therefore, choice a is correct.