Chapter 7 Quiz

MULTIPLE CHOICE
1. Which statement is not true?

a. The journal voucher is the only source of input into the general ledger.
b. A journal voucher can be used to represent summaries of similar transactions or a single
unique transaction.
c. Journal vouchers are not used to make adjusting entries and closing entries in the general
ledger.
d. Journal vouchers offer a degree of control against unauthorized general ledger entries.
2. Entries into the General Ledger System (GLS) can be made using information from
a. the general journal
b. a journal voucher which represents a summary of similar transactions
c. a journal voucher which represents a single, unusual transaction
d. all of the above
3. Which statement is not correct? The general ledger master file

a. is based on the firm’s chart of account
b. contains a record for control accounts
c. is an output of the Financial Reporting System (FRS)
d. supplies information for management decision making
4. What type of data is found in the general ledger master file?

a. a chronological record of all transactions
b. the balance of each account in the chart of accounts
c. budget records for each account in the chart of accounts
d. subsidiary details supporting a control account
5. Which report is not an output of the Financial Reporting System (FRS)?

a. variance analysis report
b. statement of cash flows
c. tax return
d. comparative balance sheet
6. Which steps in the Financial Accounting Process are in the correct sequence?
a. record the transaction, post to the ledger, prepare the adjusted trial balance, enter
adjusting entries, prepare financial statements
b. record the transaction, prepare the unadjusted trial balance, record adjusting
journal entries, record closing entries, prepare financial statements
c. record the transaction, post to the ledger, record adjusting entries, prepare the
unadjusted trial balance, prepare financial statements
d. record the transaction, post to the ledger, prepare the adjusted trial balance, prepare
financial statements, record closing entries
7. Which statement is not correct?
a. the post-closing trial balance reports the ending balance of each account in the
general ledger
b. one purpose of preparing the unadjusted trial balance is to ensure that debits equal
credits
c. financial statements are prepared based on the unadjusted trial balance
d. the unadjusted trial balance reports control account balances but omits subsidiary
ledger detail
8. What account appears on the post-closing trial balance?

a. income summary
b. Machinery
c. rent expense
d. interest income
9. Financial statements are prepared from the

a. trial balance
b. adjusted trial balance
c. general ledger
d. general journal
10. Risk exposures in the General Ledger and Financial Reporting Systems include all of the
following except
a. defective audit trail
b. unauthorized access to the general ledger
c. loss of physical assets
d. general ledger account out of balance with the subsidiary account
11. Which situation indicates an internal control risk in the General Ledger/Financial Reporting
Systems (GL/FRS)?
a. the employee who maintains the cash journal computes depreciation expense
b. the cash receipts journal voucher is approved by the Treasurer
c. the cash receipts journal vouchers are prenumbered and stored in a locked safe
d. the employee who maintains the cash receipts journal records transactions in the
accounts receivable subsidiary ledger
12. With a limited work force and a desire to maintain strong internal control, which combination of
duties performed by a single individual presents the least risk exposure?
a. maintaining the inventory ledger and recording the inventory journal voucher in
the general ledger
b. recording the inventory journal voucher in the general ledger and maintaining
custody of inventory
c. maintaining the cash disbursements journal and recording direct labor costs applied
to specific jobs
d. preparing the accounts payable journal voucher and recording it in the general
ledger
13. Operational control decisions
a. set the goals and objectives for the firm
b. involve motivating managers to use resources as productively as possible.
c. are more focused than tactical decisions
d. have a fairly high degree of uncertainty
14. Which of the following is not a report attribute needed to make a report effective?
a. relevance
b. accuracy
c. detailed
d. exception orientation
15. XBRL
a. is the basic protocol that permits communication between Internet sites.
b. controls Web browsers that access the Web.
c. is the document format used to produce Web pages.
d. was designed to provide the financial community with a standardized method for
preparing
e. is a low-level encryption scheme used to secure transmissions in higher-level
(HTTP) format.
16. An XBRL taxonomy:

a. is the document format used to produce web pages.
b. is the final product (report).
c. is a classification scheme.
d. is a tag stored in each database record.
e. none of the above is true.
17. A characteristic of the Management Reporting System (MRS) is

a. the MRS operates in conformity with generally accepted accounting principles
b. it is a legal requirement that the MRS be installed and functioning properly
c. the MRS is developed by implementing SEC requirements
d. the MRS focuses on internal decision-making information
18. Which statement is not true?

a. authority refers to an individual’s obligation to achieve desired results
b. if an employee is given the responsibility for a task, that employee should be given
authority to make decisions within the limits of that task
c. the level of detail provided to an employee is a function of the employee’s position
with the firm
d. all of the above are true
19. Which statement is not true? The manager’s span of control

a. is narrow for routine and repetitive tasks
b. is related to the number of layers of management
c. affects the amount of detail provided to a manager
d. can affect employee morale and motivation
20. Short-range planning involves

a. setting goals and objectives of the firm
b. planning the production schedule for the next quarter
c. planning the growth of the firm
d. deciding on the degree of diversification among the firm’s products
21. Long-range planning involves

a. planning the marketing and promotion for a product
b. presenting department heads with budgetary goals for the next year
c. preparing a work force utilization budget for the next quarter
d. deciding the optimum size of the firm
22. The level of management that makes tactical planning decisions is

a. top management
b. middle management
c. operations management
d. front-line management
23. The decision to enter a new market is an example of

a. strategic planning
b. tactical planning
c. management control
d. operational control
24. All of the following are elements of operational control decisions except
a. determining the scope of the activity
b. setting operating standards
c. evaluating performance
d. taking corrective action when necessary
25. In contrast to tactical planning decisions, management control decisions, and operational control
decisions, strategic planning decisions usually
a. are more focused
b. have a shorter time frame
c. are unstructured
d. have a high degree of certainty

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MULTIPLE CHOICE

1. Which statement is not true?

3. Which statement is not correct? The general ledger master file

4. What type of data is found in the general ledger master file?

5. Which report is not an output of the Financial Reporting System (FRS)?

8. What account appears on the post-closing trial balance?

9. Financial statements are prepared from the

16. An XBRL taxonomy:

17. A characteristic of the Management Reporting System (MRS) is

18. Which statement is not true?

19. Which statement is not true? The manager’s span of control

20. Short-range planning involves

21. Long-range planning involves

22. The level of management that makes tactical planning decisions is

23. The decision to enter a new market is an example of

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