Ch.13 Exam Prep Financial Reporting Processes

Accounting Information Systems, 1e (Savage)

Chapter 13 Financial Reporting Processes

1) Financial reports are prepared to provide an accurate depiction of a company's financial situation to whom?

A) CFO

B) CEO

C) External stakeholders

D) Controller

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

2) Which of the following roles in a company is responsible for financial reporting?

A) CEO

B) CFO

C) Controller

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

3) Which of the following roles in a company is responsible for overseeing accounting processes?

A) CEO

B) CFO

C) AIS

D) Controller

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

4) Which financial statement is created immediately after the income statement and balance sheet are complete?

A) Statement of stockholder's equity

B) Statement of cash flows

C) Statement of profit and loss

D) Statement of financial position

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

5) Which of the following statements concerning financial reporting is TRUE?

A) Financial statements present the financial position of a company at points in time.

B) Financial statements present results of operations over specific time periods.

C) Financial statements present results of cash flows over specific time periods.

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

6) LeBron is asked to review the financial statements created by the company to determine priorities and frequency of creation for each report as each report utilizes man hours that could be used for other activities. LeBron must consider the quality of information produced and how well the report presents the information to the end user. What information characteristic is LeBron asked to review for in his assessment of the financial reporting?

A) Decision usefulness

B) Predictive value

C) Error free

D) Verifiability

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

7) Which of the following characteristics of financial data is most important?

A) Timeliness

B) Understandability

C) Comparability

D) Accuracy

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

8) Which of the following statements is an example of timeliness of data?

A) Information is useful to determine future actions.

B) Information is available prior to a decision deadline.

C) Information is understandable by the end user.

D) Information is presented in the same way over time.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

9) Which of the following statements is FALSE?

A) Financial accounting information only serves a purpose if it is useful for decision making.

B) Information quality is the suitability of information for a particular purpose in a specific task.

C) Understandability and timeliness of data has a higher priority than relevance.

D) Relevance of information carries more priority than consistency and verifiability.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

10) Which of the following statements is TRUE with respect to financial data characteristics?

A) Enhancing characteristics of data include relevance and accuracy.

B) Enhancing characteristics of data include timeliness and comparability.

C) Fundamental characteristics of data include materiality and understandability.

D) Fundamental characteristics of data include completeness and verifiability.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

11) Jerome audits the financial statements for a firm and discovers an error in the statement of cash flows. Which characteristic of data is NOT present for decision usefulness in the financial statements that Jerome audited?

A) Relevance

B) Materiality

C) Timeliness

D) Faithful representation

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

12) The cost effectiveness of accounting information is determined by evaluating the cost of providing the information versus the

A) consistency of the information.

B) timeliness of the information.

C) value of the information.

D) accuracy of the information.

Diff: 1

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

13) Which characteristic of useful information is most clearly expressed by a company who always discloses information in the same order and style each reporting period?

A) Predictive value

B) Confirmatory value

C) Consistency

D) Understandability

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

14) Which characteristic of useful information is most clearly expressed by a firm who prioritizes providing financial statements to employees before selecting benefit options, which include stock options, index funds, or money market funds?

A) Predictive value

B) Confirmatory value

C) Timeliness

D) Understandability

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

15) Melody Corporation owns 51% of a subsidiary, A-Plus Realty (A+), which maintains its own legal public entity and financial information. Considering the ownership stake of Melody in A+, which of the following statement is TRUE?

A) A+ reports individually, and Melody reports both sets of financial statements.

B) Melody and A+ report separately.

C) A+ reports individually, and Melody reports a set of consolidated financial statements.

D) Melody reports a consolidated set of financial statements for both entities.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

16) Melody Corporation, which owns 51% of A+, uses a different AIS than A+ with different account numbers and names for many accounts. Which of the following methods could allow Melody to consolidate financial statements?

A) Consolidation software with account mapping

B) Utilizing a spreadsheet to manually consolidate data

C) Integration of XBRL

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

17) External auditors for a firm found errors in the recent financial statements. After further investigation into the issue, the auditors discovered a strong control environment that should have prevented the financial statement errors. Based on the information provided by the auditors, who do you suggest would be responsible for the errors?

A) Controller

B) Internal auditors

C) External auditors

D) Chief financial officer

Diff: 3

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

18) Financial reporting is the output of accounting professionals' work in

A) corporate accounting.

B) internal audit.

C) tax.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

19) The accounting equation, Assets = Liabilities + Owner's Equity, represents the

A) balance sheet.

B) income statement.

C) statement of stockholder's equity.

D) statement of cash flows.

Diff: 1

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

20) Which of the following statements is FALSE?

A) A chart of accounts must be developed before beginning the financial statement process.

B) The chart of accounts is a classification scheme to organize and summarize data.

C) A chart of accounts uses an industry-mandated coding system to classify accounts.

D) The chart of accounts makes creating financial statements possible.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

21) Which of the following transactions is NOT an accounting transaction for Sunshine Eats, a catering company?

A) Sunshine delivers box lunches each Monday to teachers at a local school. The delivery is set up to automatically charge a credit card for payment.

B) Sunshine signs a contract to cater a wedding three months from now at a local event center. The catering job will be paid by the event center as part of a wedding package.

C) Sunshine receives a down payment on a catered dinner for a new business grand opening coming up in two weeks.

D) Sunshine sends a monthly bill to a local coffee shop to which Sunshine delivers fresh muffins each Tuesday and Thursday.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

22) Which of the following would be considered an accounting transaction for ColdBrews, a local coffee and beer shop?

A) ColdBrews' beer supplier drops off fresh kegs on Thursday morning.

B) ColdBrews' coffee supplier emails an invoice for an order that arrived yesterday.

C) A ColdBrews manager uses the company credit card to purchase printer ink.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

23) The accounting system for The Assembly, a growing restaurant, requires that all transactions be entered as journal entries. When the bookkeeper for The Assembly enters the transactions, he discards the paperwork associated with the transaction. As an auditor for the accounting firm, which of the following recommendations should be shared with the bookkeeper?

A) As an auditor, I need to be able to review the source documents to verify the accuracy and validity of the accounting transactions. Therefore, source documents should be stored either physically or electronically.

B) Source documents do not provide an accurate audit trail as they can fade or be altered after entered in the system, so discarding them is an efficient operational decision.

C) As an auditor, I follow the audit trail generated by the AIS and do not consider the source documents when reviewing accounting transactions for accuracy.

D) Source documents take up too much physical storage space and are too difficult to sort through to be reviewed during an audit.

Diff: 3

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

24) Which type of journal would be most appropriate for recording an adjusting journal entry for depreciation?

A) Sales journal

B) Cash receipts journal

C) Special journal

D) General journal

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

25) Which type of journal would be most appropriate for recording a sale on account to a customer?

A) Sales journal

B) Purchase journal

C) General journal

D) Cash receipts journal

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

26) When a customer makes a payment on account, which of the following subsidiary ledgers would be affected by the transaction?

A) General ledger

B) Accounts receivable subsidiary ledger

C) Undeposited funds ledger

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

27) Which of the following is best defined as a listing of all the accounts and balances in the general ledger at the end of the reporting period?

A) Balance sheet

B) Trial balance

C) Chart of accounts

D) Income statement

Diff: 1

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

28) Which step of the financial reporting process occurs after the preparation of an unadjusted trial balance?

A) Post journal entries to ledgers

B) Enter adjusting entries

C) Prepare financial statements

D) Prepare an adjusted trial balance

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

29) Which of the following financial documents could be used to ensure that debits equal credits?

A) Income statement

B) Statement of cash flows

C) Statement of stockholder's equity

D) Trial balance

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

30) Which of the following steps in the financial reporting process only occurs at the end of the fiscal year?

A) Prepare an adjusted trial balance

B) Prepare financial statements

C) Prepare closing journal entries

D) Prepare an unadjusted trial balance

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

31) Which of the following internal controls over financial reporting could be automated in the AIS?

A) Resolution of reconciliation discrepancies in a timely manner

B) Identification of contingent liabilities and make necessary accruals

C) Assign responsibilities to ensure segregation of duties

D) Verification that journal entries are posted in the correct reporting period

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Risk Assessment, Analysis, and Management

32) With respect to internal controls over financial reporting, what accounting role should be the control owner for general ledger reconciliation?

A) CFO

B) AIS

C) Controller

D) Treasurer

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Risk Assessment, Analysis, and Management

33) For which of the following reasons are internal controls over financial reporting (ICFRs) necessary?

A) ICFRs mitigate fraud risk.

B) ICFRs guide internal review of financial data.

C) ICFRs help firms avoid losses of reputation and stock prices.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Risk Assessment, Analysis, and Management

34) What role in a company is responsible for ensuring legal compliance for reporting purposes?

A) Controller

B) Treasurer

C) CEO

D) AIS

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Risk Assessment, Analysis, and Management

35) Which of the following statements is TRUE?

A) Step 8 in the financial reporting process, journalize and post-closing entries, occurs at the end of each reporting period.

B) Step 8 in the financial reporting process, journalize and post-closing entries, occurs at the end of the fiscal year.

C) Posting to the general ledger, step 3, occurs at the end of the reporting period.

D) Posting to the general ledger, step 3, occurs at the end of the fiscal year.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

36) XBRL is the abbreviation for which of the following?

A) Extensible broad range language

B) Extensible business reporting language

C) Easy business reporting language

D) Easy business reporting listing

Diff: 1

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Technology and Tools

37) Which of the following is an open standard markup language, specifically designed for electronic financial reporting?

A) XBRL

B) XML

C) EBRL

D) EML

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

38) XBRL improves business' ability to

A) consolidate financial reporting information.

B) share data across departments.

C) compare performance with benchmarks.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

39) Which of the following statements is TRUE?

A) XBRL is an adaptation of XML.

B) XBRL use is mandated for SEC filings.

C) XBRL standards are available for anyone to use.

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Technology and Tools

40) For what reasons might a company decide to implement XBRL?

A) The company plans to go public next year.

B) The company would like to compare data from other public companies.

C) The company seeks greater financial consolidation efficiency.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

41) XML is the abbreviated version of which of the following?

A) Extra markup listing

B) Extra markup language

C) Extensible markup listing

D) Extensible markup language

Diff: 1

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Technology and Tools

42) Which of the following is a correct definition of a tag?

A) A tag, enclosed in angle brackets, is a standardized piece of taxonomy assigned to a piece of data, or element.

B) A tag, enclosed in square brackets, is a standardized piece of taxonomy assigned to a piece of data, or element.

C) A tag, like a barcode reader's programming, provides the structure of instance documents.

D) A tag, like a barcode reader's programming, provides the data plus structure for human readability and SEC compliance.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

43) What is the term associated with XBRL standardized structure to produce financial statements?

A) Tag

B) Format

C) Layout document

D) Instance document

Diff: 1

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Technology and Tools

44) Why would a public company decide to include XBRL interactive data tags within their financial statements?

A) The SEC requires public companies to embed iXBRL data tags.

B) The iXBRL data tags allow users to drill down into the details.

C) The company wants to improve the quality of data provided.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

45) Which of the following is a FALSE statement?

A) XBRL makes data extraction easier.

B) XBRL makes data analysis easier.

C) XBRL makes consolidations more efficient.

D) XBRL deals with numbers, not terminology.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

46) Why might an organization that is NOT a public company choose to integrate XBRL into their accounting information?

A) XBRL allows for easier consolidation of data from disparate systems with the organization.

B) XBRL simplifies the financial reporting process in such a way that the statements need not be reviewed by the CFO.

C) The SEC requires that all organizations utilize XBRL whether they are public or private.

D) The SEC requires that all organizations utilize XBRL to report comparative data.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

47) In what ways could XBRL help a young, privately held firm?

A) The firm can use XBRL to extract data efficiently for data analysis.

B) The firm will avoid fines form the SEC by implementing XBRL.

C) XBRL will remove flexibility that could cause the young firm to fail.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

48) Which of the following keywords sets the currency unit for a data element?

A) us-gaap

B) unitRef

C) contextRef

D) decimals

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

49) Which of the following keywords sets the rounding size for a data element?

A) us-gaap

B) unitRef

C) contextRef

D) decimals

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

50) Which of the following is the appropriate opening and closing bracket syntax for XBRL?

A) <> </>

B) [] [/]

C) <> [/]

D) { } {\}

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

51) Which is the correct interpretation of the XBRL shown below?

contextRef = "FD2022Q4YTD"

A) The data element covers the fiscal year 2022 ending September 30, 2022.

B) The data element covers the 4 quarters of the period ending December 31, 2022.

C) The data element displays the data from the 4th quarter of 2022.

D) The data element displays the data from 2022 except for the 4th quarter.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

52) Which of the following benefits of XBRL would be most beneficial for a company that just acquired an organization that utilized different accounting software?

A) XBRL improves data extraction capabilities.

B) XBRL can integrate nonfinancial data.

C) XBRL data is software agnostic.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

53) How will an element be displayed if the XBRL tag includes decimals="-3"?

A) The amount will be displayed without the 3 characters at the end of the number, the period and 2 decimal places.

B) The amount will be displayed rounded to the nearest thousand.

C) The amount will be displayed rounded to the nearest million.

D) The amount will be displayed without the commas separating the groups of 3 numbers.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

54) What type of accounting provides managers with accounting information that helps them make decisions within the organization?

A) Financial

B) Managerial

C) Prescriptive

D) Descriptive

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

55) Which of the following statements is FALSE?

A) Management accounting provides managers with accounting information for decisions.

B) Management accounting reports follow GAAP protocols.

C) Management accounting reports are customizable by companies.

D) Management accounting includes cost accounting and balance scorecards.

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

56) Which part of the AIS measures and helps managers control costs?

A) Financial accounting

B) Prescriptive accounting

C) Cost accounting

D) Price accounting

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

57) Which of the following statements is TRUE?

A) Businesses must follow GAAP for managerial accounting reports.

B) Measuring and controlling costs is only necessary for businesses who focus on low cost.

C) Businesses who choose a product differentiation strategy to achieve competitive advantage focus on research, and development not managerial accounting.

D) Businesses create value by combining and converting resources into goods or services that customers want at either a lower cost or better quality than competitors.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

58) Farm Fresh Bites offers dine-in, carry-out, frozen meals, and bakery items using locally-sourced meat, produce, and grains. Farm Fresh Bites appeals to many groups of customers and has pricing based on their quality products that is competitive in the restaurant market. Which type of strategy is Farm Fresh Bites utilizing?

A) Low cost, broad market

B) Low cost, narrow market

C) Differentiation, broad market

D) Differentiation, narrow market

Diff: 3

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

59) Overtime Fitness recently opened in a large northern city. Overtime gears its workout facility to athletes who are serious about cross-fit training with applicable equipment and trainers. Overtime's owners build much of the training equipment, leased and renovated the facility in a lower-rent part of town, and seeks to keeps membership fees lower than comparable facilities. What type of strategy has Overtime Fitness chosen to employ?

A) Cost leadership

B) Cost focus

C) Differentiation

D) Differentiation focus

Diff: 3

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

60) Which type of business strategy involves the goal of being the low-cost provider in an industry?

A) Cost leadership

B) Cost focus

C) Differentiation

D) Differentiation focus

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

61) Which type of business strategy involves a business seeking to provide a unique, high-quality product or service in a narrow target market?

A) Cost leadership

B) Cost focus

C) Differentiation

D) Differentiation focus

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

62) Which of the following statements is FALSE?

A) Management accounting includes creating reports for management decision making purposes, such as the balanced scorecard.

B) Financial accounting includes creating reports for external stakeholders, such as the income statement and balance sheet.

C) Cost accounting includes creating reports associated with the conversion process, such as purchasing reports.

D) Responsibility accounting includes creating reports for responsible parties, such as XBRL instance documents.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

63) What type of accounting is used to trace performance and hold accountable the managers of those departments?

A) Financial accounting

B) Cost accounting

C) Responsibility accounting

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

64) Which of the following statements is TRUE of responsibility accounting reports?

A) Responsibility accounting reports are used to trace performance to the responsible department.

B) Responsibility accounting reports follow GAAP guidelines.

C) The SEC mandates the public release of responsibility reports.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

65) Which of the following statements concerning responsibility accounting reports is FALSE?

A) Responsibility accounting reports are used to trace performance to the responsible department or manager to improve accountability.

B) Responsibility accounting reports go beyond the scope of financial accounting reports and cannot be generated by the AIS.

C) Responsibility accounting reports are customized for managers based on their areas of responsibility.

D) Responsibility accounting reports break-down financial data by controllable costs in a department.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

66) As the report creator for your company's AIS, you recently received a request for some custom reports to show detail about outstanding accounts receivables for the accounts receivable manager. What category of accounting is the report is the accounts receivable manager asking you to create?

A) Financial accounting

B) Cost accounting

C) Responsibility accounting

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

67) Which of the following best describes a balanced scorecard?

A) Internal assessment tool

B) Provides key performance indicators

C) Turns strategy into action

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

68) What type of accounting tool combines financial and nonfinancial measures for managerial reporting?

A) Responsibility report

B) Corporate scorecard

C) Balanced scorecard

D) Cost report

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

69) The success of using a balanced scorecard is the

A) link to the organization's strategic plan.

B) accuracy of the data reflected.

C) ability to update the scorecard frequently.

D) use of multiple types of key performance indicators.

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

70) Which of the following most accurately reflects the four traditional dimensions of a balanced scorecard?

A) Financial, managerial, customer relationships, and vendor relationships

B) Financial, customer relationships, internal business processes, and learning and growth

C) Innovation, financial, managerial, and customer relationships

D) Innovation, managerial, customer relationships, and learning and growth

Diff: 1

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

71) Job satisfaction and employee turnover are examples of what type of metric on a balanced scorecard dashboard?

A) Internal processes

B) Customer relationships

C) Financial

D) Learning and growth

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

72) Which of the following features in an ERP system contribute to financial reporting?

A) Shipment of product

B) Payroll

C) Stock control

D) All of these answer choices are correct.

Diff: 1

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

73) What is the record-keeping system that captures all journal entries and validates them using the trial balance?

A) Financial reporting

B) General ledger

C) Budget

D) Chart of accounts

Diff: 1

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

74) What feature in an ERP system summarizes detailed transactions that occur in sub-ledger accounts?

A) Chart of accounts

B) Consolidated ledger

C) General ledger

D) Income statement

Diff: 1

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Comprehension

AICPA: AC: Reporting

75) What type of audit technique involves using a calculation to verify the completeness of the journal entry by adding a journal entry to the beginning balance and comparing it to the ending balance?

A) Trial balance roll forward

B) Trial balance roll backward

C) General ledger roll forward

D) General ledger roll backward

Diff: 1

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Knowledge

AICPA: AC: Reporting

76) In which module of the ERP system do the raw material management and product costing features reside?

A) Supply chain management

B) Sales management

C) Production

D) Financial

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

77) Company A acquires Company Z. Company Z uses an ERP system that is incompatible to the one used by Company A. As a corporate manager, you must carefully consider the cost of switching Company Z to Company A's ERP system versus the

A) decision usefulness of the financial data.

B) corporate leadership appetite for adopting a new system.

C) time investment to make the switch.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

78) Jessica works as an accountant for a local manufacturing company. At the company, Jessica is responsible for validating all journal entries. What report should Jessica use to accomplish the journal entry validation?

A) Income statement

B) Balance sheet

C) Trial balance

D) Ledger statement

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

79) Ava works in the human resources (HR) department for the firm. Currently, the HR department is not integrated with the ERP system for the firm. Ava sees the opportunity to improve the department through employee development. What modules should Ava recommend be added to the ERP system for the firm to boost the efficiency of the HR department?

A) Talent management

B) Recruiting and onboarding

C) Training and development

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

80) When developing the entity relationship diagram for the general ledger, which of the following fields is the most likely primary key, or unique identifier, for the chart of accounts?

A) Account number

B) Account name

C) Account description

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

81) In an entity relationship diagram for the general ledger, each journal entry includes a foreign key field for the Employee_ID of the employee who both posted and approved the transaction. Which of the following statements concerning the Employee_ID field used in this context is TRUE?

A) The Employee_ID field is not enough information. The transaction should also include the employees' names and departments to allow auditors to complete their review.

B) The Employee_ID would be a good candidate key for the primary key of the JournalEntry table listing each entry in the general ledger.

C) Additional employee information required can be pulled from the Employee table as the Employee_ID field is a foreign key related to the Employee table inserted into the JournalEntry table.

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Technology and Tools

82) Brandon, an auditor for XYZ Accounting, is set to perform an audit of the general ledger for a new client tomorrow morning. Which audit analytics should Brandon perform first?

A) General ledger prescriptive analytics

B) General ledger roll forward

C) Trial balance roll forward

D) Trial balance prescriptive analytics

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

83) A trial balance roll forward analytics technique allows auditors to determine if the journal entry data is

A) complete.

B) balanced.

C) correct.

D) clear.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

84) When an audit team performs a trial balance roll forward, the team uses a calculation to verify completeness by re-creating the ending balance by

A) recalculating the totals.

B) changing the dates of the entries and reviewing the new total.

C) querying data from the database.

D) adding the journal entry activity to the beginning balance.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

85) Gregor is reviewing the financial statements of his newly formed company. Gregor is most concerned about the inflow and outflow of funds within the new organization. Which financial statement will be most useful for Gregor?

A) Income statement

B) Balance sheet

C) Statement of cash flows

D) Statement of stockholder's equity

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

86) Maybelle, a leader in the Flowers-R-Us organization, asked the accounting department to develop a way for the corporate leaders to review important financial data and ratios regularly. Jeri evaluated the Flowers-R-Us ERP and determined that the system could generate the data requested in real time. Which of the following actions would be most appropriate for Jeri?

A) Jeri could design vertical analysis reports to run each quarter for Maybelle.

B) Jeri could design a dashboard with financial ratios and metrics that could be accessed by Maybelle and other leaders at any time.

C) Jeri could set up general ledger monitoring to create a summary report of the day's transactions for Maybelle.

D) All of these answer choices are correct.

Diff: 3

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

87) Which type of financial statement analysis is most appropriate to review for an indication of financial statement fraud?

A) Income statement vertical analysis

B) Income statement horizontal analysis

C) Balance sheet ratios

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

88) Which type of analytic may identify unusual spikes in revenue journal entry activity?

A) Dormant accounts

B) Daily revenue

C) Benford analysis

D) Revenue reversals

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

89) Which type of analytic may identify fraudulent journal entries that are manually input into the general ledger?

A) Benford analysis

B) Unauthorized users

C) General ledger close

D) Round dollar entries

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

90) Which type of analytics may identify journal entry fraud related to revenue inflation?

A) Revenue reversals

B) General ledger close

C) Daily revenue

D) All of these answer choices are correct.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

91) Explain the concept of cost-effectiveness with respect to accounting information.

Diff: 2

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Analysis

AICPA: AC: Reporting

92) Financial statements for The Pastry Mom use the recommended chart of accounts from the AIS. Several investors in The Pastry Mom are individuals rather than institutional investors. How could The Pastry Mom's accounting team enhance the understandability of the financial statements and increase decision usefulness for the aforementioned investors?

Diff: 3

Learning Objective: 13.1 Identify the role of the accounting information system in financial reporting.

Section Reference: How Is an AIS Involved in Financial Reporting?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

93) Arrange the following steps in the financial reporting process in order from beginning to end.

Step 2. Record transaction in appropriate journal

Step 3. Post to general ledger

Step 4. Prepare unadjusted trial balance

Step 5. Journalize and post adjusting entries

Step 6. Prepare adjusted trial balance

Step 7. Prepare financial statements

Step 8. Journalize and post-closing entries

Step 9. Prepare post-closing trial balance

Diff: 3

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Synthesis

AICPA: AC: Reporting

94) Use the accounting equation to demonstrate that the pro-forma balance sheet shown below balances.

Diff: 2

Learning Objective: 13.2 Document the generation of financial statements within the accounting information system.

Section Reference: How Are Financial Statements Generated by an AIS?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

95) Sketch the relationship between XBRL and XML and how they work together to generate financial statements using instance documents.

Diff: 2

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

96) Support the argument for a private company to implement XBRL.

Diff: 3

Learning Objective: 13.3 Explain how XBRL promotes reporting efficiency.

Section Reference: How Does XBRL Create Efficient Financial Reporting?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Technology and Tools

97) Assess the value of cost accounting for a company utilizing a product differentiation strategy?

Diff: 3

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Evaluation

AICPA: AC: Reporting

98) Given the balanced scorecard diagram, choose which of the following reports would fit into each dimension.

Reports:

ROI

Customer satisfaction rate

Market segment success

Cash flow

Process efficiency

Equipment downtime

Job satisfaction

Training opportunities

Diff: 2

Learning Objective: 13.4 Describe when to use key management accounting reports.

Section Reference: Are There Other Important Financial Accounting Reports?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Reporting

99) Match the list journal entry test analytics with most appropriate description of how the test is used.

Diff: 2

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Application

AICPA: AC: Technology and Tools

100) Demi, a local banker, requests quarterly financial statements from her business line of credit clients. One of her clients, Josef, asked Demi to explain why he should have to create so many reports so often for her. How should Demi answer Josef?

Diff: 3

Learning Objective: 13.5 Summarize the importance of data analytics and reporting for financial reporting decision making.

Section Reference: How Is Financial Reporting Data Used for Insights and Decision Making?

AACSB: Analytic

Bloom's: Synthesis

AICPA: AC: Reporting

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