Complete
Solutions for Accounting Information System 12e by Marshall B. Romney Paul J. Steinbart
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CHAPTER 16
GENERAL LEDGER AND
REPORTING SYSTEM
16.1 Although XBRL facilitates the electronic exchange of financial
information, some external users do not think it goes far enough. They would
like access to the entire general ledger, not just to XBRL-tagged financial
reports that summarize general ledger accounts. Should companies provide
external users with such access? Why or why not?
16.2 How can responsibility
accounting and flexible budgets improve morale?
16.3 Why is the audit trail an important control?
16.4 The balanced scorecard measures
organizational performance along four dimensions. Is it possible that measures
on the customer, internal operations, and innovation and learning dimensions
could be improving without any positive change in the financial dimension? If
so, what are the implications of such a pattern?
16.5 Do you think that mandatory standards should be developed for the
design of graphs of financial data that are included in annual reports and
other periodic communications to investors? Why or why not?
16.1 Match the term in the left column
with its appropriate definition from the right column:
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1. journal voucher file
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a. an individual
financial statement item
|
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2. instance document
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b. evaluating
performance based on controllable costs
|
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3. XBRL element
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c. evaluating performance
by computing standards in light of actual activity levels
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4. Balanced Scorecard
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d. the set of journal
entries that updated the general ledger
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5. XBRL extension
taxonomy
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e. a set of files that
defines XBRL elements and specifies the relationships among them
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6. audit trail
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f. a multi-dimensional
performance report
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7. XBRL taxonomy
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g. a file that defines
relationships among XBRL elements
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8. XBRL linkbase
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h. a file that defines
the attributes of XBRL elements
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9. XBRL schema
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i. a detective
control that can be used to trace changes in general ledger account balances
back to source documents
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10. XBRL style sheet
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j. a file that
explains how to display an XBRL instance document
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11. responsibility
accounting
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k. a file that
contains specific data values for a set of XBRL elements for a specific time
period or point in time
|
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12. flexible budget
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l. a file
containing a set of customized tags to define new XBRL elements that are
unique to a specific organization
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16.2 Which control procedure would be most effective in addressing the
following problems?
a. When entering a journal entry to record issuance of
new debt, the treasurer inadvertently transposes two digits in the debit
amount.
b. The spreadsheet used to calculate accruals had an
error in a formula. As a result, the controller’s adjusting entry was for the
wrong amount.
c. The controller forgot to make an adjusting entry to
record depreciation.
d. A sales manager tipped off friends that the company’s
financial results, to be released tomorrow, were unexpectedly good.
e. The general ledger master file is stored on disk.
For some reason, the disk is no longer readable. It takes the accounting
department a week to reenter the past month’s transactions from source
documents in order to create a new general ledger master file.
f. The controller sent a spreadsheet containing
a preliminary draft of the income statement to the CFO by e-mail. An investor
intercepted the e-mail and used the information to sell his stock in the
company before news of the disappointing results became public.
g. A company’s XBRL business report was incorrect
because the controller selected the wrong element from the taxonomy.
h. Instead of a zero, the letter o was entered when typing
in data values in an XBRL instance document.
16.3 Explain the components of an audit trail for verifying changes to
accounts payable. Your answer should specify how those components can be used
to verify the accuracy, completeness, and validity of all purchases, purchase
returns, purchase discounts, debit memos, and cash disbursements.
16.4 As manager of a local pizza parlor,
you want to develop a balanced scorecard so you can more effectively monitor
the restaurant’s performance.
a. Propose at least two goals for each dimension, and
explain why those goals are important to the overall success of the pizza
parlor. One goal should be purely performance-oriented and the other should be
risk-related.
b. Suggest specific measures for each goal developed
in part a.
c. Explain how to gather the data needed for each
measure developed in part b.
16.5 Use Table 16-1 to create a questionnaire checklist that can be
used to evaluate controls in the general ledger and reporting cycle.
1. a. For
each control issue, write a Yes/No question such that a “No” answer represents
a control weakness. For example, one question might be “Is access to the
general ledger restricted?”
1. b. For
each Yes/No question, write a brief explanation of why a “No” answer represents
a control weakness.
16.6 Visit the SEC website (www.sec.gov) and explore what is available in terms of interactive data (the
SEC’s term for XBRL reports). Use the SEC’s viewer software and examine the
annual reports for two companies.
16.7 Obtain the annual report of a company assigned by your professor.
Read the management discussion and analysis section, and develop a balanced
scorecard that reflects that company’s vision, mission, and strategy. Create
both performance-oriented and risk-based goals and measures for each section of
the balanced scorecard.
16.8 Excel Problem
Objective: Practice graph design principles.
Use the data in Table 16-3 to create the following graphs:
1. a. Sales
1. b. Sales
and Gross Margin
1. c. Earnings
per share
1. d. Which
principles of graph design, if any, did you have to manually implement to
over-ride the default graphs created by Excel?
16.9 Excel Problem
Objective: Create pivot tables for what-if analysis
.
Read the article “Make Excel an Instant Know-It-All” by Roberta
Ann Jones in the March 2004 issue of the Journal of Accountancy.
(Available at www.aicpa.org)
).
a. Follow the instructions in the article to create a
spreadsheet with pivot tables.
c. Assume that Brown and David are in sales group 1
and the other three salespeople are in sales group 2. Print out a report that
shows monthly sales for each group.
16.10 Excel Problem Objective: How to do
what-if analysis with graphs.
a. Read the article “Tweaking the Numbers,” by Theo
Callahan in the June 2001 issue of the Journal of Accountancy (either
the print edition, likely available at your school’s library, or access the
Journal of Accountancy archives at www.aicpa.org). Follow the instructions in
the article to create a spreadsheet with graphs that do what-if analysis.
1. b. Now
create a spreadsheet to do graphical what-if analysis for the “cash gap.” Cash
gap represents the number of days between when a company has to pay its
suppliers and when it gets paid by its customers. Thus, Cash gap = Inventory
days on hand + Receivables collection period – Accounts payable period.
The purpose of your spreadsheet is to display visually what
happens to cash gap when you “tweak” policies concerning inventory,
receivables, and payables. Thus, you will create a spreadsheet that looks like
Figure 16-11.
1. c. Set
the three spin buttons to have the following values:
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