STANDARD LEDGER AND REPORTING PROGRAM
SUGGESTED ANSWERS TO CONVERSATION QUESTIONS
of sixteen. 1Although XBRL facilitates the electronic exchange of financial information, several external users do not believe it will go far enough. They would like access to the complete general journal, not just to XBRL-tagged economic reports that summarize basic ledger accounts. Should businesses provide external users with such gain access to? Why or why not?
No, companies must not provide entry to their basic ledger. Offering external users access to a company's standard ledger unwraps the company approximately significant competitive and economical risk.
16. 2How can responsibility accounting and versatile budgets improve morale?
Responsibility accounting enhances morale simply by holding managers accountable only for the activities over which they have control. In this way, they can be not unfairly " punishedвЂќ for poor performance that they can could not change.
Versatile budgeting enables more accurate presentation of deviations from finances. For example , if perhaps activity levels are greater than planned, then costs must also increase. Therefore , costs above the original price range may not be " badвЂќ if perhaps they have gone up at a rate lower than or equal to the in proportion increase in activity.
16. 3Why is the taxation trail an essential control?
The audit trek is a private eye control used to verify the accuracy and completeness of transaction finalizing. Tracing a couple of source papers forward through the journal entries that updated the general ledger verifies the transactions were actually recorded. Tracing within general journal accounts returning to source documents provides a approach to validate that the orders did without a doubt occur and that they were noted correctly.
Although an accounting system should use a variety of digesting integrity settings to prevent errors from occurring, preventive settings are never totally effective. Therefore , they need to become supplemented with detective handles like an taxation trail.
16. 4The balanced scorecard steps organizational performance along four dimensions. Is it feasible that steps on the customer, internal procedures, and development and learning dimensions could possibly be improving without the positive enhancements made on the financial dimension? In the event so , what are the implications of such a design?
It may certainly be feasible for measures upon three measurements of the well-balanced scorecard to further improve, but for economic results to deteriorate. This may happen because the 3 other areas will be leading indicators of financial overall performance. If therefore , the latter should certainly soon begin to improve.
On the other hand, it may be that the measures developed intended for the other locations are mistaken in that they just do not address activities that buyers value. Subsequently, improved efficiency on individuals dimensions does not translate into superior profitability. In this case, management must redesign the nonfinancial measurements of the Well-balanced Scorecard to include items that will be causally linked to future financial performance.
Yet another possibility is that macroeconomic factors could possibly be depressing revenue.
Evidently, a company simply cannot continue consistently with decreasing financial overall performance. Top managing needs to investigate the fundamental causes of this kind of pattern.
16. 5Do you think that necessary standards ought to be developed for the design of charts of financial data that are a part of annual information and other regular communications to investors? So why or why not?
There is no correct answer here but it will need to generate a fantastic discussion. It might be helpful to begin the discussion off by talking about the revealing standards in the SEC and FASB.
It may also become useful to find annual reports or additional financial information stories that contain graphs which in turn violate more than one of the rules presented with this chapter, and inquire students to go over the effects, if any, of such violations.
Should certainly students...
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