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Chapter 71
Chapter 72
Chapter 7
Accounting Information Systems
Accounting Principles, Ninth Edition
Chapter 73
1. Identify the basic concepts of an accounting information system.
2. Describe the nature and purpose of a subsidiary ledger.
3. Explain how companies use special journals in journalizing.
4. Indicate how companies post a multi-column journal.
Study Objectives Study Objectives Study Objectives
Chapter 74
Basic Concepts of Accounting Information Systems
Basic Concepts Basic Concepts of Accounting of Accounting Information Information Systems Systems
Subsidiary Ledgers Subsidiary Subsidiary Ledgers Ledgers
Special Journals Special Special Journals Journals
Computerized Computerized accounting accounting systems systems Manual Manual accounting accounting systems systems
Example Example Advantages Advantages
Sales journal Sales journal Cash receipts Cash receipts journal journal Purchases Purchases journal journal Cash payments Cash payments journal journal Effects of special Effects of special journals on journals on general journal general journal
Accounting Information Systems Accounting Information Systems Accounting Information Systems
Chapter 75
The accounting information system (AIS) collects and processes 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.
Basic Concepts of AIS Basic Concepts of AIS Basic Concepts of AIS
SO 1 Identify the basic concepts of an accounting information s SO 1 Identify the basic concepts of an accounting information system. ystem.
Chapter 76
Basic Concepts of AIS Basic Concepts of AIS Basic Concepts of AIS
SO 1 Identify the basic concepts of an accounting information s SO 1 Identify the basic concepts of an accounting information system. ystem.
Cost Effectiveness - Benefits must outweigh the costs.
Flexibility - The system should be sufficiently flexible to meet
the resulting changes in the demands made upon it.
Useful Output
Illustration 7-1 Principles of an efficient and effective AIS.
Chapter 77
Software programs (functions include sales, purchases, receivables, payables, cash receipts and disbursements, and payroll).
Generate financial statements.
Advantages: Ø Typically enter data only once. Ø Many human errors are eliminated. Ø More timely information.
Computerized Accounting Systems
Basic Concepts of AIS Basic Concepts of AIS Basic Concepts of AIS
SO 1 Identify the basic concepts of an accounting information s SO 1 Identify the basic concepts of an accounting information system. ystem.
Chapter 78
Choosing a software package
Entry-Level Software
Ø Common features and benefits:
v Easy data access and report preparation
v Audit trail
Enterprise Resource Planning Systems
Computerized Accounting Systems
Basic Concepts of AIS Basic Concepts of AIS Basic Concepts of AIS
SO 1 Identify the basic concepts of an accounting information s SO 1 Identify the basic concepts of an accounting information system. ystem.
Chapter 79
Perform each step in the accounting cycle by hand.
Satisfactory in a company with a low volume of transactions.
Must understand manual accounting systems to understand computerized accounting systems.
Manual Accounting Systems
Basic Concepts of AIS Basic Concepts of AIS Basic Concepts of AIS
SO 1 Identify the basic concepts of an accounting information s SO 1 Identify the basic concepts of an accounting information system. ystem.
Chapter 710
Chapter 711
Used to keep track of individual balances.
Two common subsidiary ledgers are:
1. Accounts receivable (customers‛)
2. Accounts payable (creditors‛)
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
SO 2 Describe the nature and purpose of a subsidiary ledger. SO 2 Describe the nature and purpose of a subsidiary ledger.
Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger.
Chapter 712
Illustration 7-3
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
SO 2 Describe the nature and purpose of a subsidiary ledger. SO 2 Describe the nature and purpose of a subsidiary ledger.
Relationship of general ledger and subsidiary ledgers
Chapter 713
1. Show in a single account transactions affecting 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.
Subsidiary Ledgers Subsidiary Ledgers Subsidiary Ledgers
SO 2 Describe the nature and purpose of a subsidiary ledger. SO 2 Describe the nature and purpose of a subsidiary ledger.
Advantages of Subsidiary Ledgers
Chapter 714
Chapter 715
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Used to record similar types of transactions.
If a transaction cannot be recorded in a special journal, the company records it in the general journal.
Illustration 7-5
Chapter 716
Each of the following is a subsidiary ledger except the:
a. accounts receivable ledger. b. accounts payable ledger. c. customer‛s ledger. d. general ledger.
Review Question Review Question
Special Journals Special Journals Special Journals
Chapter 717
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Sales Journal Illustration 7-6
Under a perpetual inventory system, one entry at selling price in Sales Journal 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.
Chapter 718
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Illustration 7-7
Companies make daily postings from the sales journal to the individual accounts receivable
in the subsidiary ledger.
POSTING THE SALES JOURNAL
Chapter 719
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Illustration 7-7
Posting to the general ledger is done monthly.
POSTING THE SALES JOURNAL
Chapter 720
One-line entry for each sales transaction saves time.
Only totals, rather than individual entries, are posted to the general ledger.
A division of labor results.
Advantages of Sales Journal
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Chapter 721
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
In the cash receipts journal, companies record all receipts of cash. The posting of the cash receipts journal is similar to the posting of the sale journal. See complete Illustration 7-9 in the text.
Illustration 7-9 Cash Receipts Journal
Chapter 722
Cash sales of merchandise are recorded in the: a. cash payments journal. b. cash receipts journal. c. general journal. d. sales journal.
Review Question Review Question
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Chapter 723
Which of the following is not one of the credit columns in the cash receipts journal:
a. Other accounts. b. Accounts payable. c. Accounts receivable. d. Sales.
Review Question Review Question
Special Journals Special Journals Special Journals
SO 3 Explain how companies use special journals in journalizing SO 3 Explain how companies use special journals in journalizing. .
Chapter 724
Special Journals Special Journals Special Journals
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Illustration 7-13
Daily postings are made from the purchases journal to the accounts
payable subsidiary ledger.
Purchases Journal
Chapter 725
Special Journals Special Journals Special Journals
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Illustration 7-13
Purchases Journal
At the end of the accounting period, the company posts totals to
the general ledger.
Chapter 726
All of the following are advantages of using subsidiary ledgers except they:
a. show transactions affecting one customer or one creditor in a single account.
b. free the general ledger of excessive details. c. eliminate errors in individual accounts. d. make possible a division of labor.
Review Question Review Question
Special Journals Special Journals Special Journals
Chapter 727
Special Journals Special Journals Special Journals
In a cash payments (cash disbursements) journal, companies record all disbursements of cash. The procedures for posting the cash payments journal are similar to those for other journals.
Illustration 7-16 Cash Payments Journal
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter 728
Credit purchases of equipment or supplies other than merchandise are recorded in the:
a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal.
Review Question Review Question
Special Journals Special Journals Special Journals
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter 729
Cash payments of merchandise are recorded in the:
a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal.
Review Question Review Question
Special Journals Special Journals Special Journals
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter 730
Special journals substantially reduce the number of entries that companies make in the general journal.
Only transactions that cannot be entered in a special journal are recorded in the general journal.
Also, correcting, adjusting, and closing entries are made in the general journal.
Effects of Special Journals on the General Journal
Special Journals Special Journals Special Journals
SO 4 Indicate how companies post a multi SO 4 Indicate how companies post a multi- -column journal. column journal.
Chapter 731
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