CHAPTER 8

GENEREAL LEDGER AND REPORTING SYSTEM

According to the video, there are four (4) main activities that general ledger and reporting system
performs. (1) Update the general ledger, (2) Post the adjusting entries, (3) Prepare financial
statement and (4) Prepare managerial reports. Updating of general ledger consist of two sources. (1)
Summary journal entries from routine transaction (special journals). (2) Individual journal entries for
non-routine transactions (general journals).

Adjusting entries consist of accruals, Deferrals, Estimates, Re-evaluation, and Error Corrections.
General ledger of Adjusting entries should be stored in the journal voucher file. Once adjusting
entire are recorded, an adjusted trial balance is prepared. This will serve as the input for the
preparation of financial statements. Activities in the preparation of financial statements include; (1)
income statement, (2) closing entries, (3) statement of stockholder equity, (4) balance sheet and (5)
statement of cash flows

The last step includes produce management reports. This reports are purposely for internal use. The
reports is further divided into two parts. Firstly report to verify the accuracy of the posting process
and secondly is the budget report for planning and evaluating performance. As explained by the
narrator in the video, the two parts is further divided into several parts which have different
responsibilities and performance. For example in the budget reports for planning and evaluating
performance, it contains three reports which management gives and they are operating budget,
capital expenditure budget and cash flow budget.

It further explains the content of budget. The contents are, cost centres, revenue centres, profit
centres and investment centres. Those four contents then further separated into different parts
which contain different responsibilities and performance. Also the narrator explains the errors that
might contain in updating the management report. The errors could be based on incorrect
information or general management fraud.

Overall the video covers information processing system and how IT developments impact the
general ledger and reporting system and also the major treats and controls to mitigate these treats.