01.accounting information system
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Accounting Information
SystemsRakesh S. Pandya
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Describe an effective
accountinginformation system.
Objective 1
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Control
Compatibility
Flexibility
Cost/benefit relationship
Basic Features
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Basic Features
Compatibilitymeans that the system
works smoothly with operations,personnel, and the organizationalstructure.
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Internal controls are the methodsand procedures used to authorize
transactions and safeguard assets.
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Basic Features
Flexibilityrelates to the systemsability to accommodate changes in the
organization.
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A cost/benefit relationship indicates
that the cost of controls do not exceedtheir value to the organization.
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CompanyPersonnel
Hardware
Software
Computerized Accounting
System
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Computerized Accounting
SystemHardware is the electronic equipment
that makes up a computer system.
Software is a system of instructionsthat drive the computer to performvarious functions.
Properly trainedpersonnel are criticalto the successful operations of thesystem.
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Objective 2Understand both
computerized and manualaccounting systems.
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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
PERSONNELinput transactions,
requestreports, protectrecords
REPORTSDATA
INPUT OUTPUT
posted accessed forreports
HARDWARE
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Designing an Accounting
System
Design of the accounting system beginswith the chart of accounts.
The chart of accounts lists all accountsand their account number in theledger.
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Menu-Driven Accounting
SystemComputer systems are organized by
function or task.
Computer systems usually have achoice of processing options on amenu.
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Menu-Driven Accounting
SystemGeneral Receivables Payables Payroll Reports
Posting
AccountMaintenanceCOMPUTERIZED
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 ReportsTrialBalance
FinancialStatements
AccountsReceivable Detail
AccountsPayable Detail
Daily CashReport
IncomeStatement
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 3Understand how spreadsheets
are used in accounting.
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Integrated Accounting
Systems
Computerized accounting systems areorganized by modules.
These modules are separate butintegrated 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 cashcollections in the month of May.
Past experience indicates that 50% ofcredit sales are collected in the monthof 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 likethese easier.
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Spreadsheet ExampleIncome 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 4Use the sales journal,
the cash receipts journal,and the accounts receivable
ledger.
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Special JournalsWhat are special journals?
They are accounting journals used to
record one specific type of transaction.What are some examples?
Sales CashReceipts Payroll
Cash DisbursementsPurchases
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Sales JournalPage 5
Invoice Account Account PostDate 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
Using the Sales Journal
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Sales JournalPage 5
Invoice Account Account Post
Date Number Debited Number Ref.Amount
Jan. 2 203 XYZ Co. 120-111 900.00
TOTAL2,200.00
120/410
General LedgerAccount: Accounts Receivable Account Number: 120Date Description Post Ref Debit Credit BalanceJan. 2 Sales SJ5 2,200 2,200
Using the Sales Journal
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Using the Sales Journal
Sales Journal Page 5
Invoice Account Account PostDate Number Debited Number Ref. AmountJan. 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 toprovide 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 individualaccount balances in a subsidiaryledger.
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Debits CreditsSales Accounts
SalesDate Cash Discounts ReceivableRevenue Jan. 2 200
200
11 882 18 900
30 800 800
31 1,882 18 900 1,000
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 toenter other account descriptions and
amounts.Cash receipts amounts affecting
subsidiary ledger accounts are posted
daily to keep customer balances up todate.
At month end, foot and crossfoot thejournal and post to the general ledger.
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Objective 5Use the purchase journal, the
cash disbursements journal,and the accounts payable
ledger.
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Purchases Journal
This is designed to account for allpurchases of inventory, supplies,
services, and other assets on account.
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Purchases Journal
Cash purchases are recorded in thecash disbursements journal.
At month end the journal is footed andcrossfooted.
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 arerecorded in the cash disbursements
journal.The cash disbursements journal is also
called:
check register cash payments journal
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Cash Disbursements JournalThis has columns for :
date
check number payee
cash amount (credit)
accounts payable (debit)
description and amount of other debitsand credits
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General Journal
Special journals save much time inrecording repetitive transactions and
posting to the ledger.However, some transactions do not fit
into any of the special journals.
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General JournalEvery accounting system needs a
general journal.
What entries are recorded in thegeneral journal?
depreciation
expiration of prepaid insurance accrual of salaries payable
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General JournalMany 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 acustomers Accounts Receivable.
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Purchase Returns and
Allowances
A debit memorandum is the businessdocument that states that the buyer no
longer owes the seller for the amountof the returned purchases.
The buyer debits the Accounts Payableto the seller and credits Inventory.
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Balancing the LedgersAt the end of the accounting period:
Total debits and credits of account
balances in the general ledger areequal.
Control account balances are equal to
the sum of the appropriate subsidiaryledger accounts.
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Thank you?