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Accounting Information Systems Notes by bqy69086

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									Accounting Information
       Systems
      Chapter 7
Objective 1

     Describe an effective
          accounting
     information system.
Basic Features

              Control

           Compatibility

             Flexibility

      Cost/benefit relationship
Basic Features
 Internal controls are the methods and
  procedures used to authorize transactions
  and safeguard assets.
 Compatibility means that the system works
  smoothly with operations, personnel, and
  the organizational structure.
Basic Features
 Flexibility relates to the system’s ability to
  accommodate changes in the organization.
 A cost/benefit relationship indicates that the
  cost of controls do not exceed their value to
  the organization.
Computerized Accounting
System

          Hardware


          Software


          Company
          Personnel
Computerized Accounting
System
 Hardware is the electronic equipment that
  makes up a computer system.
 Software is a system of instructions that
  drive the computer to perform various
  functions.
 Properly trained personnel are critical to the
  successful operations of the system.
Objective 2

      Understand both
  computerized and manual
    accounting systems.
Three Stages of
Data Processing
(Source documents)
                  Input



               Processing


                             (Financial
                 Output     statements)
      Computerized
      Accounting System
                      ACCOUNTING RECORDS
    PERSONNEL                   Journals,
input transactions, request     Ledgers,
  reports, protect records    Other records
                           posted       accessed for
                                        reports

                              HARDWARE
                                               printed to
  INPUT         entered,                       paper,       OUTPUT
                edited         SOFTWARE        screen
   DATA                       PROCESSING                    REPORTS
Designing an Accounting System
 Design of the accounting system begins
  with the chart of accounts.
 The chart of accounts lists all accounts and
  their account number in the ledger.
Menu-Driven Accounting
System
 Computer systems are organized by
  function or task.
 Computer systems usually have a choice
  of processing options on a ―menu.‖
 Menu-Driven Accounting
 System
General Receivables Payables Inventory Payroll Reports Utilities


  Posting                               COMPUTERIZED
  Account Maintenance                    ACCOUNTING
                                           SYSTEM
  Closing


Use arrow keys to make choice.
Press <return> to access choice.                  MAIN
Press F7 <escape> to leave menu.
 Preparing Accounting Reports

Trial   Financial  Accounts          Accounts       Daily Cash
Balance Statements Receivable Detail Payable Detail Report


  Income Statement                 Statement of Owners’ Equity
  Balance Sheet                    Statement of Cash Flows


Use arrow keys to make choice.
Press <return> to access choice.                      REPORTS
Press F7 <escape> to leave menu.
Objective 3

Understand how spreadsheets
  are used in accounting.
Integrated Accounting Systems
 Computerized accounting systems are
  organized by modules.
 These modules are separate but integrated
  units.
 A sales transaction entry will update two
  modules:
1 Accounts Receivable/Sales
2 Inventory/Cost of Goods Sold
Ana’s Boutique Example
 Ana wants to budget for expected cash
  collections in the month of May.
 Past experience indicates that 50% of credit
  sales are collected in the month of sales and
  50% the following month.
Ana’s Boutique Example
 May sales were $250,000.
 $50,000 were cash sales.
 April credit sales amounted to $120,000.
 What are the expected cash collections
  during the month of May?
Ana’s Boutique Example

 May cash sales                    $ 50,000
 Collection of April’s credit sales  60,000
 Collection of May’s credit sales   100,000
 Total
      $210,000
 Spreadsheets make computations like these
  easier.
    Spreadsheet Example
  Formula for B4: =B2–B3
       Column: A                   B       C
Row: 1 Income Statement:

     2 Revenues                  100,000

     3 Expenses                   60,000

     4 Net Income                 40,000

     5
         Cursor is on cell B4.
Objective 4

      Use the sales journal,
   the cash receipts journal,
  and the accounts receivable
            ledger.
Special Journals
 What are special journals?
 They are accounting journals used to record
  one specific type of transaction.
 What are some examples?

   Sales       Cash Receipts          Payroll

   Purchases         Cash Disbursements
  Using the Sales Journal

                 Sales Journal            Page 5
       Invoice   Account   Account   Post
Date Number      Debited   Number    Ref. Amount
Jan. 2 201       Joe Co.   120-122       600.00
Jan. 2 202       May Co.   120-033       700.00
Jan. 2 203       XYZ Co.   120-111       900.00
                 TOTAL                    2,200.00
                           120/410
  Using the Sales Journal
               Sales Journal          Page 5
       Invoice Account Account Post
Date Number Debited Number Ref. Amount
Jan. 2 203     XYZ Co. 120-111     900.00
               TOTAL                2,200.00
                       120/410

                General Ledger
Account: Accounts Receivable Account Number: 120
Date Description Post Ref Debit Credit Balance
Jan. 2 Sales         SJ5     2,200        2,200
  Using the Sales Journal
           Sales Journal    Page 5
       Invoice Account Account Post
Date Number Debited Number Ref. Amount
Jan. 2 203     XYZ Co. 120-111     900.00
               TOTAL                  2,200.00
                       120/410


                 General Ledger
Account: Credit Sales        Account Number: 410
Date Description Post Ref Debit Credit Balance
Jan. 2 Sales          SJ5          2,200 2,200
Subsidiary Ledger
 A subsidiary ledger is often used to provide
  details on individual balances of...
– customers (accounts receivable) and...
– suppliers (accounts payable).
A Control Account
 What is a control account?
 It is the general ledger account.
 It equals the sum of the individual account
  balances in a subsidiary ledger.
  Cash Receipts Journal — Page 6

         Debits                 Credits
                 Sales    Accounts      Sales
Date Cash       Discounts Receivable   Revenue
Jan. 2   200                               200
    11   882         18          900
    30   800                                800
    31 1,882         18          900      1,000

        (101)     (420)     (112)         (410)
   Accounts Receivable


XYZ Company    Subsidiary Ledger
       Jrnl.
Date   Ref.    Debit     Credit    Balance
Jan. 2 S.5     900                  900
    11 CR.6               900        -0-
       General Ledger


Cash                               No. 101
          Jrnl.                    Debit
Date      Ref.    Debit   Credit   Balance
Jan. 31   CR.6    1,882
Cash Receipts Journal
 Additional columns are provided to enter
  other account descriptions and amounts.
 Cash receipts amounts affecting subsidiary
  ledger accounts are posted daily to keep
  customer balances up to date.
 At month end, foot and crossfoot the journal
  and post to the general ledger.
Objective 5

 Use the purchase journal, the
 cash disbursements journal,
  and the accounts payable
            ledger.
Purchases Journal
 This is designed to account for all purchases
  of inventory, supplies, services, and other
  assets on account.
Purchases Journal
 Cash purchases are recorded in the cash
  disbursements journal.
 At month end the journal is footed and
  crossfooted.
 Posting to the general ledger is similar to
  posting from sales and cash receipts
  journals.
Cash Disbursements Journal
 Most payments are by check and are
  recorded in the cash disbursements journal.
 The cash disbursements journal is also
  called:
– check register
– cash payments journal
Cash Disbursements Journal
 This has columns for :
– date
– check number
– payee
– cash amount (credit)
– accounts payable (debit)
– description and amount of other debits
  and credits
General Journal
 Special journals save much time in
  recording repetitive transactions and posting
  to the ledger.
 However, some transactions do not fit into
  any of the special journals.
General Journal
 Every accounting system needs a general
  journal.
 What entries are recorded in the general
  journal?
– depreciation
– expiration of prepaid insurance
– accrual of salaries payable
– adjusting and closing entries
General Journal
 Many companies record sales returns and
  allowances and purchase returns in the
  general journal.
 A credit memorandum is the document
  issued by the seller for a credit to a
  customer’s Accounts Receivable.
Purchase Returns and
Allowances
 A debit memorandum is the business
  document that states that the buyer no
  longer owes the seller for the amount of
  the returned purchases.
 The buyer debits the Accounts Payable to
  the seller and credits Inventory.
Balancing the Ledgers
 At the end of the accounting period:
 Total debits and credits of account balances
  in the general ledger are equal.
 Control account balances are equal to the
  sum of the appropriate subsidiary ledger
  accounts.
End of Chapter 7

								
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