Ch. 3

Question 1

The key processes in financial accounting

Answer 1

1. general ledger (GL)
2. Accounts receivables accounting
3. accounts payable accounting
4. Asset accounting
5. bank ledger accounting

Question 2

Is used to record the financial impacts of business process steps

Answer 2

general ledger (GL)

Question 3

is associated with the fulfillment process and is used to manage money owed by customer for goods and services sold to them

Answer 3

Accounts receivables accounting

Question 4

is associated with the procurement process. Manage money owed to the vendor.

Answer 4

accounts payable accounting

Question 5

Is used to record data related to the purchase, use, and disposal of assets such as buildings equipment, machinery, and automobiles

Answer 5

Asset accounting

Question 6

is concerned with recording data associated with bank transactions.

Answer 6

bank ledger accounting

Question 7

Typical financial statements

Answer 7

balance sheet
Income statement/ profit and loss statement
statement of cash flow

Question 8

is a snapshot of the organization at a point in time. Financial position of an organization

Answer 8

balance sheet

Question 9

indicates the changes in a company’s financial position over a period of time. Indicates the financial performance of an organization.

Answer 9

Income statement, also known as a profit and loss statement

Question 10

displays all cash receipts and payments over a specified period of time

Answer 10

statement of cash flow

Question 11

Organizational Data has three elements or levels.

Answer 11

Client
Company Code
Business areas

Question 12

are internal divisions of an enterprise

Answer 12

Business areas

Question 13

is a division of an enterprise for which management monitors performance

Answer 13

segment

Question 14

A list of accounts that can be included in a general ledger an ordered listing of accounts that comprise a company’s general ledger.

Answer 14

chart of accounts

Question 15

Are what the company owns, such as cash, inventory of materials, land, buildings, and money owed to the company by its customers (receivables)

Answer 15

Assets

Question 16

are what the company owes to others, including money owed to vendors (payables) and loans from financial institutions

Answer 16

Liabilities

Question 17

refers to the owner’s share of the company’s assets.

Answer 17

Owner’s equity

Question 18

are the monies the company earns by selling its products and services

Answer 18

Revenues

Question 19

are the costs associated with creating and selling those products and services.

Answer 19

Expenses

Question 20

groups together accounts with similar characteristics.

Answer 20

account group

Question 21

all bank and cash accounts are consolidated in one account group

Answer 21

liquid assets

Question 22

The typical company code data in general ledger accounts consist of the following elements.

Answer 22

Account currency
tax-related data
field status group

Question 23

determines the currency in which all the transactions are recorded.

Answer 23

Account currency

Question 24

each country has to comply with distinctive tax laws that require it to include different

Answer 24

tax-related data

Question 25

determiner both the screen lay out for documents entry and the status of each field on the screen.

Answer 25

field status group

Question 26

each item in the account is marked as either "open" or "cleared"

Answer 26

open item management

Question 27

which are temporary accounts that hold data until these data are moved to another account

Answer 27

clearing accounts

Question 28

display is enabled, a link to the line-items that are included in account balances is maintained.

Answer 28

line-item

Question 29

Asset accounts are used to track the purchase price as well as increases and decreases in the asset's value over time. Such accounts are maintained in ____________________.

Answer 29

subsidiary ledgers or subledgers

Question 30

are general ledger accounts that consolidate data from a group of related subledger accounts

Answer 30

Reconciliation accounts

Question 31

Records the impact (financial data) of a transaction step on financial accounting

Answer 31

Financial accounting document (FI document)

Question 32

is a two character code that identifies the specific business process step that generated the document.

Answer 32

document type

Question 33

which is a two-digit code that determines how a low item in posted

Answer 33

posting key

Question 34

an organizations can implement multiple ledgers in parallel and use each ledges for different purposes

Answer 34

parallel accounting

Question 35

is associated with a location where costs are incurred

Answer 35

cost center

Question 36

Costs incurred during processes can be allocated to or absorbed by these orders

Answer 36

cost objects

Question 37

have a physical form

Answer 37

Tangible assets

Question 38

are nonphysical form

Answer 38

intangible assets

Question 39

include a variety of financial instruments such as securities, long-term notes (debts), and mortgages

Answer 39

Financial assets

Question 40

a group of assets that possess similar characteristics

Answer 40

asset class

Question 41

The two most important parameters

Answer 41

account determination Depreciation

Question 42

The reconciliation account for each asset in the asset subledger account is determined by its association with an asset class.

Answer 42

account determination

Question 43

an asset's value diminishes due to wear and tear.

Answer 43

Depreciation

Question 44

which specifies how long the company anticipates using the asset.

Answer 44

useful life

Question 45

which is the value of the asset after it is depreciated.

Answer 45

book value

Question 46

is used to prepare financial statements for shareholders and to meet regulatory requirements.

Answer 46

Book depreciation

Question 47

is used to allocate the cost of using the asset to a cost center

Answer 47

Cost accounting depreciation

Question 48

is used to file federal and state income tax returns

Answer 48

Tax depreciation

Question 49

After an asset has completed its useful life, it is disposed of, or retired.

Answer 49

Retirement

Question 50

provides an overview of all the activities related to the asset

Answer 50

asset explorer

Question 51

is a hierarchical grouping of general ledger accounts that must be included in the financial statements.

Answer 51

financial statement version

Question 52

Three transaction types

Answer 52

Acquisition Depreciation Retirement

Question 53

Asset can be acquired either externally or through internal processes.

Answer 53

Acquisition

Question 54

If an asset has completed its useful life

Answer 54

Retirement

Question 55

A depreciation that is planned, periodic, and recurring decrease

Answer 55

Ordinary depreciation

Question 56

When extraordinary or unforeseen circumstances cause the asset to lose value

Answer 56

Unplanned depreciation

Question 57

Account information can be obtained at three levels

Answer 57

Account balance Line items display Original FI documents