Accounting Information Systems Accrual Basis ◦ When it happens ◦ Cash Basis ◦ When paid ◦...

Accounting Information Systems

Accrual Basis◦ When it happens◦

Cash Basis◦ When paid◦ Mostly Service type business

Dentist, Doctor, Lawyers

1/10 Places an order Record in purchase order file to track what has been

requested and what has been ordered ( managerial) but not in financial accounting records.

2/15 Receives desk and bill Record the exchange of assets --you now have the desk

and the cost of the desk, exact amount of the bill.

3/1 Pays the bill Writes a check and sends it to the vendor.

COST◦Original Cost- “Historical”

Classification: Assets= Liabilities+Stk Equity+Revenue-

Expense Accounts: Cash, A/R, Supplies, Inventory A/P, Mortgage Payable, X Payable,Unearned X Common Stock, Dividends, Retained Earnings Sales, Services Performed Rent X, Wages X,

Chart or List of the Accounts

Chart of Accounts-◦ Lists accounts that can be used in recording a

business transaction. CFO approval to open an account.

Revenue – Expenses = Net IncomeWho gets the net income? Stockholder

Net Income goes to Retained EarningsDividends reduces Retained Earnings and

goes to Stockholders

A. A/P - B.Supplies - C. Dividend - D. Fees Earned- E. Supplies X - F. A/R - G. Unearned Revenue- H. Equipment -

Double - TWO (2)◦ Every entry must have at least two entries or

accounts

____Debit_______________Credit_______ | | | Washington D.C. AC/DC

All transactions must have1 Debit1 Credit

A=L+SE+R-EDr Cr Cr Cr Dr

A+E+Div = L+SE+R Dr CrNormal NormalBalance Balance

CLASS NORM BAL Cash Wages Expense A/R Common Stock Service Revenue Prepaid Rent A/P Investments

CLASS NORM BALBonds Payable Income Taxes Exp Land Supplies Exp Prepaid Insurance Utilities Exp Fees Earned Dividends Wages Payable

CLASS NORM BALUnearned Revenue Office Equipment Rent Payable Notes Receivable Interest Expense Notes Payable Supplies Interest Receivable Rent Expense

What did you buy or receive How did you or your customer pay for it. What accounts do you use What is it’s classification What its normal balance. Did you increase it - same as normal

balance Did you decrease it-opposite of normal

balance

4 steps: General Journal Post to General Ledger or T-accounts From GL do a Trial Balance From Trial Balance do Financial Statements

May 2 Cash Common Stock

5 Office EquipmentCash

7 SuppliesAccounts Payable

19 Cash Program Service Rev (Earned

22 CashUnearned Program Service Rev

25 Rent ExpenseCash

31 Accounts Receivable Program Service Revenue

Cash A/R Supplies Office Equipment

2000 | 300 800 | 150| 300 |

3000 | 700 1000 5000 A/P Common Stock Prog Svc Rev Rent

Expense 150 | | 2000 |3000 700|

| 800Unearned Rev 3800 | 1000

Report :Does the equation balance-- trial Normal Balance must be maintained Accounting equation vertically A Dr L Cr SE Cr R Cr E Dr XX XX

Comaque Shoe Repair Service, Inc.Trial BalanceJune 30, 20XX

Cash $4,210Repair Supplies 500Repair Equipment 1,900A/P $ 300Common Stock 5,900Dividends 600Repair Fees Earned 1,860Salaries Expense 450Rent Expense 400

_____ $8,060

$8,060

Transposition 950 to 590

Slides 1000 to 100

All divisable by 9 or numbers add to 9

E2-10 pg 93 E2-13 pg 94

HOMEWORK P2A, P3A, P5A, P7A, P9A