05/01/2023

Lecture 9- Accounting Records: TPS Chapter 2

Habib Ullah QamarGovt. college of Commerce Gujranwala

Transactions Transaction Cycles Cash flow of TPS Subsystems of Cycles The Expenditure cycle Conversion cycle Revenue cycle

Review of Last Lecture

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Today’s Topic Accounting Records Manual Accounting System Records Documents Journals Ledger Audit Trial Computer Based Systems Files and its types The Digital Audit Trail

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A document, voucher or journal (Hard or soft Copy) that is used as an evident of economic event in a transaction cycle is called Accounting record.

Manual System examples are…..? Documents Ledgers journals

Accounting Record

A document provides evidence of an economic event and may be used to initiate transaction processing. Example?

Voucher / receipt Some documents are a result of transaction

processing. Example? Bill etc Source documents, product documents And turnaround documents

Documents

Source Documents Documents being created at the beginning

(the source) of the transaction after an economic event occurred and used to capture and formalize transaction data that the transaction cycle needs for processing are called Source document.

For Example a customer order some products to buy, salesman collect the list of items and issue a sale order to sale department, Sales Order?

Product documents are the result of transaction processing rather than the triggering mechanism for the process.

For example, a payroll check to an employee is a product document of the payroll system.

Product Docments

Turnaround documents are those product documents that are used as a source documents for another system/subsystem.

It contains important information about a customer’s account to help the cash receipts system process the payment.

Cash receipts will match customer payments to the correct customer accounts.

Hence the bill issued by sales system is the input or source document for cash receipt system

Turn-around Document

Relation and Types of Cycles

A quiz

Type of Transaction cycle?

Type of Event?

Source Document?

ECONOMIC

Revenue

Sales Order

Quiz 2

Turn-Around Document

Find Source document, product document, and turnaround document

Source Document

Product Document

What is journal Special Register General journal

Journals

Definition Types General Subsidiary

Ledger

The accounting records discussed provide an audit trail/trace/follow for tracing transactions from source documents to the financial statements.

Of the many purposes of the audit trail, most important to accountants is the year-end audit.

While the study of financial auditing falls outside the scope of this text.

Read in Book…….

The Audit Trail

If you read Audit Trail of Manual system, you will find it less observable, but still this system is being used.

CBS stores the data and information of manual system in digital format in three different type of magnetic files.

Master File Transaction File Reference File

Computer Based System(CBS)

Master File : It contains account data previously stored in ledger.

Data values, also called accounting records, are updated with transaction Files.

Transaction File : used to change or update values stored in Master File. Examples?

Sales orders, receipts etc examples. Reference File: stores data that are used as

standards or reference for processing of transaction. Examples?

Customer List, Tax Rates, Price Lists, Archive Files: Records of Past Transaction

retained for future use.

Types of Files

CBS

Files?Dashed Lines

How you will define Accounting records? What is difference between Economic and

non-economic Transaction? Try to enlist achievements of computer

based system as compared to Manual System.

A bill generated by sales system is a …………………….documents.

What is symbol used for system in diagrams?

Text Quiz

Documentation Techniques…Chapter 2 Data Flow Diagrams Entity Relation Diagram Flow Charts Pre-reading will be appreciated and will give

you more benefit…

Future topic

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Thank you , take careSee you again in sha ALLAH