AIS Chapter 16 Problem 16.2, Chapter 3 Intermediate Accounting, Accou
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
1. When entering a journal entry to record issuance of new debt, the treasurer
inadvertently transposes two digits in the debit amount (threat): Control:
• Use a cross-footing balance check to test the equality of debits and credits
2. 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 (threat): Con-
trol:
• Audit spreadsheets used to support journal entries
3. The controller forgot to make an adjusting entry to record depreciation
(threat): Control:
• Create a set of standard adjusting entries
4. A sales manager tipped off friends that the company's financial results, to
be released tomorrow, were unexpectedly good (threat): Control:
• Implement access controls to prevent the sales manager from obtaining access to
the general ledger and reporting system.
5. 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.: Control:
• Backup files more frequently.
• Create two copies of the backup files and store one on-site and the other off-site.
6. 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.: Control:
• Encrypt sensitive financial information when it is transmitted over the Internet.
7. A company's XBRL business report was incorrect because the controller
selected the wrong element from the taxonomy.: Control:
• Train users on the proper use of the taxonomy to prevent this..
• Audit or validate the instance document prior to submission to detect this.
8. Instead of a zero, the letter o was entered when typing in data values in an
XBRL instance document.: Control:
• Use processing integrity controls when entering data in instance documents.
• Use a field check to detect this kind of error.
9. account: a systematic arrangement that shows the effect of transactions and
other events on a specific element
10. accounting cycle: The process by which companies produce their financial
statements for a specific period
, AIS Chapter 16 Problem 16.2, Chapter 3 Intermediate Accounting, Accou
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
11. accounting information system: collects and processes transaction data and
then disseminates the financial information to interested parties
12. accrual-basis accounting: recognize revenue when performance obligation is
satisfied and expenses in the period incurred, without regard to the time of receipt
or payment of cash
13. accrued expenses: expenses incurred but not yet paid or recorded at the
statement date
14. accrued revenues: revenues for services performed but not yet recorded at the
statement date
15. adjusted trial balance: the trial balance taken immediately after all adjustments
have been posted
16. adjusting entry: entries made at the end of an accounting period to bring all
accounts up to date on an accrual basis
17. balance sheet: shows the financial condition of the enterprise at the end of a
period
18. book value: the difference between any depreciable asset's cost and its related
accumulated depreciation
19. closing entries: the formal process by which the enterprise reduces all nominal
accounts to zero and determines and transfers the net income/loss to a stockholders'
equity account
20. closing process: reduces the balance of nominal accounts to zero in order to
prepare the accounts for the next period's transactions
21. contra asset account: offsets an asset account on the balance sheet
22. credit: right side of T account
23. debit: left side of T account
24. depreciation: process of allocating the cost of an asset to expense over its
useful life in a rational and systematic manner
25. double-entry accounting: a company records the dual effect of each transac-
tion in appropriate accounts; for every debit there is a credit
26. event: is the source or cause of changes in assets, liabilities, and equity
27. financial statements: statements that reflect the collection, tabulation, and final
summarization of the accounting data. Balance sheet, income statement, statement
of cash flows, and statement of retained earnings
28. general journal: where the company initially records transactions and selected
other events
29. general ledger: a collection of all the asset, liability, stockholders' equity, rev-
enue, and expense accounts
30. income statement: measures the results of operations during the period
, AIS Chapter 16 Problem 16.2, Chapter 3 Intermediate Accounting, Accou
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
31. journal: the "book of original entry" where the company initially records trans-
actions and selected other events
32. journalizing: entering the transaction data in the journal
33. ledger: the book (or computer printouts) containing the accounts
34. modified cash basis: a mixture of the cash basis and accrual basis; based
on strict cash basis but with modifications that have substantial support, such as
capitalizing and depreciating plant assets or recording inventory
35. nominal accounts: temporary accounts such as revenue, expense, and divi-
dend accounts; except for dividends, they appear on the income statement; compa-
nies close these accounts to equity accounts at the end of the period
36. post-closing trial balance: a trial balance taken immediately after closing
entries have been posted
37. posting: the process of transferring the essential facts and figures from the book
of original entry to the ledger accounts
38. prepaid expenses: assets paid for and recorded before a company uses them
39. real accounts: permanent accounts such as asset, liability, and equity accounts;
they appear on the balance sheet
40. reversing entries: the opposite of the adjusting entry made in the previous
period
41. special journals: summarize transactions possessing a common characteristic
ex. cash receipts, sales, purchases, cash payments
42. statement of cash flows: reports the cash provided and used by operating,
investing, and financing activities during the period
43. statement of retained earnings: reconciles the balance of the retained earn-
ings account from the beginning to the end of the period
44. strict cash basis: record revenue only when cash is received and record
expenses only when cash is dispersed
45. subsidiary ledger: contains the details related to a given general ledger ac-
count
46. T-account: the format of an account resembles a T
47. transaction: an external event involving a transfer or exchange between two or
more entities
48. trial balance: the list of all open accounts in the ledger and their balances
49. unearned revenues: when cash is received before services are performed
50. worksheet: facilitates the end-of-period accounting and reporting process
51. What sources does the general ledger and reporting system use to collect
and organize data? (4): -Each of the accounting subsystems
-The treasurer provides information about financing and investing activities
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
1. When entering a journal entry to record issuance of new debt, the treasurer
inadvertently transposes two digits in the debit amount (threat): Control:
• Use a cross-footing balance check to test the equality of debits and credits
2. 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 (threat): Con-
trol:
• Audit spreadsheets used to support journal entries
3. The controller forgot to make an adjusting entry to record depreciation
(threat): Control:
• Create a set of standard adjusting entries
4. A sales manager tipped off friends that the company's financial results, to
be released tomorrow, were unexpectedly good (threat): Control:
• Implement access controls to prevent the sales manager from obtaining access to
the general ledger and reporting system.
5. 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.: Control:
• Backup files more frequently.
• Create two copies of the backup files and store one on-site and the other off-site.
6. 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.: Control:
• Encrypt sensitive financial information when it is transmitted over the Internet.
7. A company's XBRL business report was incorrect because the controller
selected the wrong element from the taxonomy.: Control:
• Train users on the proper use of the taxonomy to prevent this..
• Audit or validate the instance document prior to submission to detect this.
8. Instead of a zero, the letter o was entered when typing in data values in an
XBRL instance document.: Control:
• Use processing integrity controls when entering data in instance documents.
• Use a field check to detect this kind of error.
9. account: a systematic arrangement that shows the effect of transactions and
other events on a specific element
10. accounting cycle: The process by which companies produce their financial
statements for a specific period
, AIS Chapter 16 Problem 16.2, Chapter 3 Intermediate Accounting, Accou
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
11. accounting information system: collects and processes transaction data and
then disseminates the financial information to interested parties
12. accrual-basis accounting: recognize revenue when performance obligation is
satisfied and expenses in the period incurred, without regard to the time of receipt
or payment of cash
13. accrued expenses: expenses incurred but not yet paid or recorded at the
statement date
14. accrued revenues: revenues for services performed but not yet recorded at the
statement date
15. adjusted trial balance: the trial balance taken immediately after all adjustments
have been posted
16. adjusting entry: entries made at the end of an accounting period to bring all
accounts up to date on an accrual basis
17. balance sheet: shows the financial condition of the enterprise at the end of a
period
18. book value: the difference between any depreciable asset's cost and its related
accumulated depreciation
19. closing entries: the formal process by which the enterprise reduces all nominal
accounts to zero and determines and transfers the net income/loss to a stockholders'
equity account
20. closing process: reduces the balance of nominal accounts to zero in order to
prepare the accounts for the next period's transactions
21. contra asset account: offsets an asset account on the balance sheet
22. credit: right side of T account
23. debit: left side of T account
24. depreciation: process of allocating the cost of an asset to expense over its
useful life in a rational and systematic manner
25. double-entry accounting: a company records the dual effect of each transac-
tion in appropriate accounts; for every debit there is a credit
26. event: is the source or cause of changes in assets, liabilities, and equity
27. financial statements: statements that reflect the collection, tabulation, and final
summarization of the accounting data. Balance sheet, income statement, statement
of cash flows, and statement of retained earnings
28. general journal: where the company initially records transactions and selected
other events
29. general ledger: a collection of all the asset, liability, stockholders' equity, rev-
enue, and expense accounts
30. income statement: measures the results of operations during the period
, AIS Chapter 16 Problem 16.2, Chapter 3 Intermediate Accounting, Accou
ing Information Systems 14e Test 1
Study online at https://quizlet.com/_59ldfh
31. journal: the "book of original entry" where the company initially records trans-
actions and selected other events
32. journalizing: entering the transaction data in the journal
33. ledger: the book (or computer printouts) containing the accounts
34. modified cash basis: a mixture of the cash basis and accrual basis; based
on strict cash basis but with modifications that have substantial support, such as
capitalizing and depreciating plant assets or recording inventory
35. nominal accounts: temporary accounts such as revenue, expense, and divi-
dend accounts; except for dividends, they appear on the income statement; compa-
nies close these accounts to equity accounts at the end of the period
36. post-closing trial balance: a trial balance taken immediately after closing
entries have been posted
37. posting: the process of transferring the essential facts and figures from the book
of original entry to the ledger accounts
38. prepaid expenses: assets paid for and recorded before a company uses them
39. real accounts: permanent accounts such as asset, liability, and equity accounts;
they appear on the balance sheet
40. reversing entries: the opposite of the adjusting entry made in the previous
period
41. special journals: summarize transactions possessing a common characteristic
ex. cash receipts, sales, purchases, cash payments
42. statement of cash flows: reports the cash provided and used by operating,
investing, and financing activities during the period
43. statement of retained earnings: reconciles the balance of the retained earn-
ings account from the beginning to the end of the period
44. strict cash basis: record revenue only when cash is received and record
expenses only when cash is dispersed
45. subsidiary ledger: contains the details related to a given general ledger ac-
count
46. T-account: the format of an account resembles a T
47. transaction: an external event involving a transfer or exchange between two or
more entities
48. trial balance: the list of all open accounts in the ledger and their balances
49. unearned revenues: when cash is received before services are performed
50. worksheet: facilitates the end-of-period accounting and reporting process
51. What sources does the general ledger and reporting system use to collect
and organize data? (4): -Each of the accounting subsystems
-The treasurer provides information about financing and investing activities
