accounting system [compatibility mode]

7/27/2019 Accounting System [Compatibility Mode]

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ACCOUNTING

Basic ConceptsBasic Concepts

of Accountingof Accounting

InformationInformation

SystemsSystems

SubsidiarySubsidiary

LedgersLedgers

SpecialSpecial

JournalsJournals

ComputerizedComputerized

accountingaccounting

systemssystems

ExampleExample

AdvantagesAdvantages

Sales journalSales journal

Cash receiptsCash receipts

journaljournal

ManualManual

accountingaccounting

systemssystems

PurchasesPurchases

journaljournal

Cash paymentsCash payments

journaljournal

Effects of specialEffects of special

journals onjournals ongeneral journalgeneral journal


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The accounting information system (AIS) collects

and rocesses transaction data and communicates

financial information to decision makers.

Includes:

All steps in the accounting cycle.

Documents that provide evidence of transactions.

Manual or computerized accounting system.

Cost Effectiveness - Benefitsmust outweigh the costs.

UsefulOutput

Illustration 7-1Principles of anefficient andeffective AIS.

Flexibility - The system shouldbe sufficiently flexible to meet

the resulting changes in thedemands made upon it.


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Computerized Accounting Systems

,purchases, receivables, payables, cash receiptsand disbursements, and payroll).

Generate financial statements.

Advantages:

.

Many human errors are eliminated.

More timely information.

Computerized Accounting Systems

Entry-Level Software

Common features and benefits:

Easy data access and report preparation

Audit trail

Enterprise Resource Planning Systems


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Manual Accounting Systems

hand.

Satisfactory in a company with a low volume of

transactions.

Must understand manual accounting systems to

understand computerized accounting systems.

Used to keep track of individual balances.

Two common su si iary e gers are:

1. Accounts receivable (customers)

2. Accounts payable (creditors)

equal the composite balance of the individual accountsin the related subsidiary ledger.


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Illustration 7-3Relationship of general ledger and subsidiary ledgers

Advantages of Subsidiary Ledgers

. ow in a sing e account transactions a ecting

one customer or one creditor.

2. Free the general ledger of excessive details.

3. Help locate errors in individual accounts.

4. Make possible a division of labor.


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Used to record similar types of transactions.Illustration 7-5

If a transaction cannot be recorded in a special journal,the company records it in the general journal.

Sales Journal Illustration 7-6

Under a perpetual inventory system, one entry at selling price in SalesJournal results in a debit to Accounts Receivable and a credit to Sales.

Another entry at cost results in a debit to Cost of Goods Sold and a

credit to Merchandise Inventory.


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Advantages of Sales Journal

ne- ine entry or eac sa es transaction saves

time.

Only totals, rather than individual entries, are

posted to the general ledger.

.

Illustration 7-9Cash Receipts Journal

In the cash receipts journal, companies record all receipts of cash.

The posting of the cash receipts journal is similar to the posting ofthe sale journal. See complete Illustration 7-9 in the text.


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Illustration 7-13

Purchases Journal

Daily postings are made from thepurchases journal to the accounts

payable subsidiary ledger.

Illustration 7-13

Purchases Journal

At the end of the accountingperiod, the company posts totals to

the general ledger.


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Illustration 7-16Cash Payments Journal

In a cash payments (cash disbursements) journal, companiesrecord all disbursements of cash.

The procedures for posting the cash payments journal are similar tothose for other journals.

Effects of Special Journals on the General Journal

number of entries that companies make in thegeneral journal.

Only transactions that cannot be entered in a

special journal are recorded in the general

ourna .

Also, correcting, adjusting, and closing entries

are made in the general journal.