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Accounting Information Systems
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Describe the features of
an effective accounting
information system.
Objective 1
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Control
Comparability
Flexibility
Cost/benefit relationship
Basic Features
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Basic Features
Internal controls are the methods and
procedures used to authorize transactions
and safeguard assets.
Comparability means that the system works
smoothly with operations, personnel, and
the organizational structure.
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Basic Features
Flexibility relates to the systems 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.
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CompanyPersonnel
Hardware
Software
Computerized Accounting
System
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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 trainedpersonnelare critical to the
successful operations of the system.
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Objective 2
Understand how both
computerized and manual
accounting systems work.
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Processing
Input(Source documents)
(Financialstatements)Output
Three Stages of
Data Processing
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Computerized
Accounting System
entered,edited
printed topaper,screen
ACCOUNTING RECORDS
Journals,Ledgers,
Other records
SOFTWARE
PROCESSING
PERSONNEL
input transactions, requestreports, protect records
REPORTSDATA
INPUT OUTPUT
posted accessed forreports
HARDWARE
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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.
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Menu-Driven Accounting
System Computer systems are organized by
function or task.
Computer systems usually have a choice
of processing options on a menu.
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Menu-Driven Accounting
SystemGeneral Receivables Payables Payroll Reports
Posting
Account Maintenance
COMPUTERIZED
ACCOUNTING
SYSTEM
Use arrow keys to make choice.
Press to access choice.
Press F7 to leave menu.
MAIN
Inventory Utilities
Closing
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Preparing Accounting Reports
TrialBalance
FinancialStatements
AccountsReceivableDetail
AccountsPayableDetail
Daily CashReport
Income Statement
Balance Sheet
Statement of Owners Equity
Statement of Cash Flows
Use arrow keys to make choice.
Press to access choice.
Press F7 to leave menu.
REPORTS
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Objective 3
Understand how spreadsheetsare used in accounting.
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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
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Anas 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.
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Anas 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?
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Anas Boutique Example
May cash sales $ 50,000
Collection of Aprils credit sales 60,000 Collection of Mays credit sales 100,000
! Total $210,000
Spreadsheets make computations like theseeasier.
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Spreadsheet Example
Income Statement:
Revenues 100,000
Expenses 60,000
Net Income
Row: 1
2
3
4
5
Column: A B CFormula for B4: =B2B3
Cursor is on cell B4.
40,000
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Objective 4
Use the sales journal,
the cash receipts journal,
and the accounts receivable
subsidiary ledger.
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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
Cash DisbursementsPurchases
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Sales Journal Page 5
InvoiceAccount 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
Using the Sales Journal
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Sales Journal Page 5
InvoiceAccount Account Post
Date Number DebitedNumber Ref. Amount
Jan. 2 203 XYZ Co. 120-111 900.00
TOTAL
2,200.00
120/410
General LedgerAccount: Accounts Receivable Account Number: 120Date Description Post Ref Debit Credit BalanceJan. 2 Sales SJ5 2,2002,200
Using the Sales Journal
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Using the Sales Journal
Sales Journal Page 5
Invoice AccountAccount Post
Date Number DebitedNumber Ref. Amount
Jan. 2 203 XYZ Co. 120-111 900.00
TOTAL
2,200.00
120/410
General LedgerAccount: Credit Sales Account Number: 410Date Description Post Ref Debit Credit BalanceJan. 2 Sales SJ5 2,200 2,200
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Subsidiary Ledger
A subsidiary ledger is often used to provide
details on individual balances of...
customers (accounts receivable) and...
suppliers (accounts payable).
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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.
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Debits Credits
Sales Accounts SalesDate Cash Discounts Receivable
Revenue Jan. 2
200
200
11882 18
900
30
Cash Receipts Journal Page 6
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Accounts Receivable
XYZ Company Subsidiary Ledger Jrnl.
Date Ref. Debit Credit Balance
Jan. 2 S.5 900 900
11 CR.6 900 -0-
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General Ledger
Jrnl. Debit
Date Ref. Debit Credit Balance
Jan. 31 CR.6 1,882
Cash No. 101
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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 journaland post to the general ledger.
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Objective 5
Use the purchase journal, the
cash disbursements journal,
and the accounts payable
subsidiary ledger.
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Purchases Journal
This is designed to account for all purchases
of inventory, supplies, services, and other
assets on account.
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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 receiptsjournals.
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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
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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
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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.
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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
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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
customers Accounts Receivable.
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Purchase Returns and
Allowances
A debit memorandum is the business
document that states that the buyer no
longer owes the seller for the amount ofthe returned purchases.
The buyer debits the Accounts Payable to
the seller and credits Inventory.
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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.