Hall_AIS+7e+SM_Ch08

Hall_AIS+7e+SM_Ch08 - CHAPTER 8 FINANCIAL REPORTING AND...

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CHAPTER 8 FINANCIAL REPORTING AND MANAGEMENT REPORTING SYSTEMS REVIEW QUESTIONS
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Chapter 8 Page 63 1. A journal voucher is used to make entries into the general ledger accounts. The information may be a summary of many transactions or a single, unique transaction. 2. Journal vouchers must be approved by an authorized person, and thus provide an effective control against errors and unauthorized general ledger entries. 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, beginning balance, total debits and total credits for the period, and the current balance are the typical pieces of information found in each record of a general ledger master file. 4. The purpose is to present comparative financial reports on a historic basis. 5. The responsibility center file is used to collect data regarding the revenues, expenditures and relevant resources of each responsibility center. Managers of responsibility centers are held accountable for the operations of their centers and the information found in these files helps to assess performance. 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 over time and to compare performance with other organizations. The IRS needs financial information to determine whether the corporation is paying the appropriate amount of taxes, while the SEC requires the information of publicly traded organizations to ensure that the market place is fair to the average investor. 7. 1. capture the transaction 2 record in special journal
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Chapter 8 Page 64 3. post to subsidiary ledger 4. post to the general ledger 5. prepare the unadjusted trial balance 6. make adjusting entries 7. journalize and post adjusting entries 8. prepare the adjusted trial balance 9. prepare the financial statements 10. journalize and post the closing entries 11.prepare the post-closing trial balance
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Chapter 8 Page 65 8. The financial statements are prepared based upon the assumption that the users of financial reports understand the conventions and accounting principles that are applied, and that the financial statements have information content that is useful. 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 prepared, the adjusting entries are made to correct any errors and to record any unrecorded transactions (i.e. accruals) during the period. The vouchers are prepared after the adjusting entries have been identified and made to the worksheet. 10.
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This note was uploaded on 07/08/2011 for the course ACG 3481 taught by Professor Dickinson during the Fall '08 term at University of Florida.

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Hall_AIS+7e+SM_Ch08 - CHAPTER 8 FINANCIAL REPORTING AND...

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