Accounting as an information system ppt

accounting information system ppt and accounting information systems powerpoint slides
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Dr.DouglasPatton,United States,Teacher
Published Date:26-07-2017
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CHAPTER 7 ACCOUNTING INFORMATION SYSTEMS www.ThesisScientist.comAccounting Information System  An accounting information system (AIS) involves collecting and processing data and disseminating financial information to interested parties.  An AIS may either be manual or computerized. www.ThesisScientist.comPRINCIPLES OF AN EFFICIENT AND EFFECTIVE ACCOUNTING INFORMATION SYSTEM The accounting system must be cost effective. Benefits of information must outweigh the cost of providing it. Costs Benefits www.ThesisScientist.comPRINCIPLES OF AN EFFICIENT AND EFFECTIVE ACCOUNTING INFORMATION SYSTEM It must It must be be Balance relevant timely Sheet It must be Income reliable It must be Statement accurate Other Financial Reports www.ThesisScientist.comPRINCIPLES OF AN EFFICIENT AND EFFECTIVE ACCOUNTING INFORMATION SYSTEM Technological Advances Government Changing Regulation and Accounting Deregulation Principles www.ThesisScientist.comILLUSTRATION 7-2 PHASES IN THE DEVELOPMENT OF AN ACCOUNTING SYSTEM Analysis Planning and identifying information needs Follow up Design and sources Evaluating and Creating forms, monitoring effectiveness documents, procedures, and efficiency and job descriptions, and correcting any reports weaknesses Implementation Installing the system, training personnel, and making the system operational www.ThesisScientist.comSUBSIDIARY LEDGERS  A subsidiary ledger is a group of accounts with a common characteristic, such as customer accounts.  The subsidiary ledger is assembled to facilitate the recording process by freeing the general ledger from details concerning individual balances.  Two common subsidiary ledgers are the Accounts Receivable Ledger and the Accounts Payable Ledger. www.ThesisScientist.comCONTROL ACCOUNT  The general ledger account that summarizes subsidiary ledger data is called a control account.  Each general ledger control account balance must equal the composite balance of the individual accounts in the subsidiary ledger. www.ThesisScientist.comILLUSTRATION 7-3 RELATIONSHIP OF GENERAL LEDGERS AND SUBSIDIARY LEDGERS Accounts receivable controls Accounts payable controls a a subsidiary ledger of many subsidiary ledger of many different customers. different creditors. General Owner’s Accounts Accounts Cash Ledger Capital Payable Receivable Subsidiary Customer Customer Customer Ledgers A B C Creditor Creditor Creditor X Y Z www.ThesisScientist.comSUBSIDIARY LEDGERS Advantages of using subsidiary ledgers are that they: 1. Show transactions affecting one customer or one creditor in a single account. 2. Free the general ledger of excessive details. 3. Help locate errors in individual accounts by reducing the number of accounts combined in one ledger and by using controlling accounts. 4. Create a division of labour in posting by allowing one employee to post to the general ledger and a different employee to post to the subsidiary ledger. www.ThesisScientist.comSPECIAL JOURNALS Special journals are used to group similar types of transactions. If a transaction cannot be recorded in a special journal, it is recorded in the general journal. Special journals permit greater division of labour and reduce time necessary to complete the posting process. www.ThesisScientist.comILLUSTRATION 7-5 USE OF SPECIAL JOURNALS AND THE GENERAL JOURNAL Cash Cash General Purchases Sales Payments Receipts Journal Journal Journal Journal Journal Used for: Used for: Used for: Used for: Used for: Transactions All that cannot All cash All sales All cash be entered purchases paid in a special of received of journal, (including merchan- (including including merchan- cash correcting, dise on cash dise on adjusting, and purchases) account account sales) closing entries The types of special journals used depend largely on the types of transactions that occur frequently in a business enterprise. www.ThesisScientist.comJOURNALIZING THE SALES JOURNAL – PERPETUAL INVENTORY SYSTEM Karns Wholesale Supply S1 Sales Journal Cost of Goods Sold Dr Account Invoice Accts Receivable Dr Date Ref Merchandise Inventory Cr Debited Sales Cr May 3 Abbot Sisters 101  10,600 6,360 7 Babson Co. 102  11,350 7,370 14 Carson Bros. 103  7.800 5,070 19 Deli Co. 104  9,300 6,510 21 Abbot Sisters 105  15,400 10,780 24 Deli Co. 106  21,210 15,900 27 Babson Co. 107  14,570 10,200 90,230 62,190  Under a perpetual inventory system, one entry at selling price in the 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.  Postings are made monthly to the general ledger and daily to the accounts receivable subsidiary ledger. www.ThesisScientist.comILLUSTRATION 7-8 PROVING THE ACCURACY OF THE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER Accounts Receivable Subsidiary Ledger General Ledger Abbot Sisters 26,000 Accounts Receivable 90,230 Babson Co. 25,920 Carson Bros. 7,800 Deli Co. 30,510 90,230 To prove the accuracy of the ledgers it is necessary to determine whether the sum of the accounts receivable subsidiary ledger balances equals the balance in the general ledger’s Accounts Receivable control account. www.ThesisScientist.comCASH RECEIPTS JOURNAL PERPETUAL SYSTEM Karns Wholesale Supply Cash Receipts Journal Accounts CGS Dr/ Cash Sales Other Date Accounts Credited Ref Receivable Inventory Dr Cr Accounts Cr Cr Cr D. A. Karns, Capital 50 5,000 5,000 May 3 7 1,900 1,900 1,240 10 Abbot Sisters 10,600 10,600  2,600 2,600 1,690 12 17 Babson Co. 11,350 11,350  21 Notes Payable – 21 6,000 6,000 Carson Bros. 7,800 7,800 24  28 Deli Co. 9,300 9,300  54,550 39,050 4,500 2,930 11,000 54,550 The debit columns for cash and cost of goods sold must be equal to the total of the credit columns for accounts receivable, sales, inventory, and other accounts. www.ThesisScientist.comCASH RECEIPTS JOURNAL  Column totals are posted at the end of each month.  The total of the Other Accounts column is not posted. The individual amounts comprising the total are posted separately to the general ledger accounts specified in the Accounts Credited column.  The individual amounts in the Accounts Receivable column are posted daily to the subsidiary ledger account specified in the Accounts Credited column. www.ThesisScientist.comILLUSTRATION 7-11 PROVING THE LEDGERS AFTER POSTING THE SALES AND THE CASH RECEIPTS JOURNALS General Ledger Accounts Receivable Debits Subsidiary Ledger Cash 54,550 Abbot Sisters 15,400 Accounts Receivable 51,180 Cost of Goods Sold 65,120 Babson Co. 14,570 170,850 Deli Co. 21,210 51,180 Credits Merchandise Inventory 65,120 After the posting of the cash Notes Payable 6,000 D. A. Karns, Capital 5,000 receipts journal is completed, Sales 94,730 it is necessary to prove the 170,850 ledgers. The general ledger totals are in agreement and the sum of the subsidiary ledger balances equals the control account balance. www.ThesisScientist.comILLUSTRATION 7-16 PROVING THE ACCURACY OF THE ACCOUNTS PAYABLE SUBLEDGER General Ledger Accounts Payable Debits Cash 9,750 Subsidiary Ledger Accounts Receivable 51,180 Prepaid Insurance 1,200 Eaton and Howe, Inc. 12,600 D. A. Karns, Drawings 500 Fabor and Son 8,700 Purchases 64,300 Freight In 100 21,300 127,030 Credits Accounts Payable 21,300 Notes Payable 6,000 D. A. Karns, Capital 5,000 Sales 94,730 127,030 To prove the ledgers it is necessary to determine that the sum of the subsidiary ledger balances equals the balance in the control account. www.ThesisScientist.comEFFECTS ON GENERAL JOURNAL  Only transactions that cannot be recorded in a special journal are recorded in the general journal.  When the entry involves both control and subsidiary accounts: 1. In journalizing, control and subsidiary accounts must be identified, and 2. In posting there must be a dual posting (to the control account and subsidiary ledger).

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