Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
CHAPTER 8
FINANCIAL REPORTING AND MANAGEMENT
REPORTING SYSTEMS
1. REVIEW QUESTIONS
Chapter 1 Page 2
1. A journal voucher is used to make entries into the general ledger accounts. The
2. Journal vouchers must be approved by an authorized person, and thus provide
3. The general ledger master file is ordered by the chart of accounts. The account
number, the account description, the asset class, the normal balance,
5. The responsibility center file is used to collect data regarding the revenues,
expenditures and relevant resources of each responsibility center. Managers of
Chapter 1 Page 3
6. The primary users of financial statement information are external users such as
stockholders, creditors, and government agencies such as the IRS and the
SEC. These users need information that allow them to assess performance
Chapter 1 Page 4
8. The financial statements are prepared based upon the assumption that the
users of financial reports understand the conventions and accounting principles
9. Adjusting entries are made after the regular accounting entries have been
made and posted to the general ledger and any corresponding subsidiary
ledgers. After an unadjusted trial balance of the general ledger has been
10. The general ledger clerks should not: 1. have record keeping responsibility for
12. A close examination of the journal voucher listing should help to uncover any
13. XML is a meta-language for describing markup languages. The term extensible
means that any markup language can be created using XML. This includes the
Chapter 1 Page 5
14. XBRL (eXtensible Business Reporting Language) is an XML-based language
that was designed to provide the financial community with a standardized
15. Taxonomies are classification schemes that are compliant with XBRL specifications to
Chapter 1 Page 6
18. A formalization of tasks clearly specifies the responsibilities of a certain job
position. With employee responsibilities clearly specified, management can
19. Responsibility refers to an individual’s obligation to achieve desired results.
Authority refers to the empowerment of an individual to make decisions
20. Span of control refers to the number of subordinates directly under the
manager’s control. A firm with a wide span of control tends to have many
subordinates reporting to each manager. A firm with a narrow span of control
tends to have fewer subordinates reporting to each manager. Firms with a
Chapter 1 Page 7
21. The principle of management by exception is that managers should limit their
attention to potential problem areas rather than being involved with every
23. Strategic planning decisions are 1. typically long-term in nature, 2. have a high
impact on the firm, 3. require highly-summarized information, 4. typically
non-recurring problems/opportunities, and 5. are uncertain in nature. Tactical
planning decisions are 1. typically medium-term in nature, 2. have a limited
impact on the firm, 3. require detailed information, 4. are typically periodically
Chapter 1 Page 8
24. The three elements are data, procedures, and objectives. When all three
elements are known with certainty, the problem is considered to be structured.
Cash disbursements to each vendor is an example of a structured problem.
The open accounts payable is searched for due dates, the supporting
25. The problems faced by lower management levels are more likely to be
structured problems. As the management level increases, the problems tend to
28. Responsibility accounting traces every economic event to an individual
manager and holds him or her accountable. A manager should be held
Chapter 1 Page 10
31. Goal congruence means that when lower level managers pursue their own
32. Data mining is the process of selecting, exploring, and modeling large amounts
33. A data warehouse is a relational database management system that has been
designed specifically to meet the needs of data mining. The warehouse is a
34. Information overload occurs when a manager is inundated with more
Chapter 1 Page 11
35. Reports which contain either irrelevant information or information presented in
too much detail may cause managers to experience information overload.
Information overload can result in avoidance of reading reports by managers.
Further, performance measures presented on reports may cause managers to
36. Ad hoc reports allow managers to retrieve information for situations that were
not anticipated. These reports allow the managers to retrieve the information
very quickly, thus allowing the managers to respond to the situation much
quicker and more effectively. An example would be a situation in which an
Chapter 1 Page 12
37. Exception reports will be useful to help flag customers who have unpaid bills.
This information is important for future credit decisions. Also, when another
38. Direct labor, raw materials, overhead and, production level variances. The
39. Managers of profit centers have responsibility for both cost control and revenue
generation while managers of cost centers only have responsibility for costs.
Chapter 1 Page 13
