Accounting Information Systems CAPITULO 7.pptx

Accounting
Information
Systems
Chapter
7
HORNGREN ♦ HARRISON ♦ BAMBER ♦ BEST ♦ FRASER ♦

Objectives
6 - 2
Horngren ♦ Harrison ♦ Bamber ♦ Best ♦ Fraser ♦ Willett, Accounting 4e Copyright © 2004 Pearson Education Australia
1. Describe the features of an effective accounting
information system.
2. Understand how computerised and manual
accounting systems work.
3. Understand how spreadsheets are used in
accounting
4. Use the sales journal, the cash receipts journal
and the accounts receivable subsidiary ledger
5. Use the purchases journal, the cash payments
journal and the accounts payable subsidiary
ledger

Describe the
features of
an effective
accounting
information
system.
6 - 3
Objective 1

Control
Comparability
Flexibility
Cost/benefit
relationship
6 - 4
Basic Features

Basic Features
6 - 5
● Internal controls are the methods and
procedures used to authorise
transactions and safeguard assets.
● Comparability means that the system
works smoothly with operations,
personnel, and the organisational
structure.

Basic Features
6 - 6
● Flexibility relates to the system’s ability
to accommodate changes in the
organisation.
● A cost/benefit relationship indicates that
the cost of controls do not exceed
their value to the organisation.

Hardware
Software
Company
Personnel
6 - 7
Computerised Accounting
System

Computerised Accounting
System
6 - 8
● Hardware is the electronic equipment
that makes up a computer system.
● Software is a system of instructions that
drive the computer to perform various
functions.
● Properly trained personnel are critical to
the successful operations of the
system.

Objective 2
6 - 9
Understand how both
computerised and manual
accounting systems work.

Processing
Input
(Source documents)
(Financial
statements)
Output
Three Stages of
Data Processing
6 - 10

Computerised
Accounting System
entered,
edited
printed to
paper,
screen
ACCOUNTING RECORDS
Journals,
Ledgers,
Other records
SOFTWARE
PROCESSING
PERSONNEL
input transactions, request
reports, protect records
REPORTS
DATA
INPUT OUTPUT
posted accessed for
reports
HARDWARE
6 - 11

Designing an Accounting
System
● Design of the accounting system begins
with the chart of accounts.
● The chart of accounts lists all accounts
and their account number in the
ledger.
6 - 12

Menu-Driven Accounting
System
6 - 13
● Computer systems are organised by
function or task.
● Computer systems usually have a
choice of processing options on
a “menu.”

Menu-Driven Accounting
System
COMPUTERISED
ACCOUNTING
SYSTEM
Use arrow keys to make choice.
Press <return> to access choice.
Press F7 <escape> to leave menu.
MAIN
General Receivables Payables Inventory Payroll Reports
Posting
Account Maintenance
Closing
6 - 14

Preparing Accounting Reports
Trial
Balance
Financial
Statements
Accounts
Receivable Detail
Accounts
Payable Detail
Daily Cash
Report
Statement of Financial Performance Statement of Owners’ Equity
Statement of Financial Position Statement of Cash Flows
Use arrow keys to make choice.
Press <return> to access choice.
Press F7 <escape> to leave menu.
REPORTS
6 - 15

Objective 3
6 - 16
Understand how
spreadsheets
are used in accounting.

Integrated Accounting Systems
6 - 17
● Computerised accounting systems are
organised by modules.
● These modules are separate but
integrated units.
● A sales transaction entry will update two
modules:
1 Accounts Receivable / Sales
2 Inventory / Cost of Goods Sold

Ana’s Boutique Example
6 - 18
● Ana wants to budget for expected cash
collections in the month of May.
● Past experience indicates that 50% of
credit sales are collected in the
month of sales and 50% the
following month.

6 - 19
● May sales were $250,000.
● $50,000 were cash sales.
● April credit sales amounted to
$120,000.
● What are the expected cash collections
during the month of May?

6 - 20
Collection of April’s credit sales 60,000
Collection of May’s credit sales 100,000
Total $210,000
● May cash sales $ 50,000



● Spreadsheets make calculations like these
easier.

Spreadsheet Example
Statement of Financial Performance:
Revenues 150,000
Expenses 90,000
Net Profit
Row: 1
2
3
4
Column: B C
Formula for B4: =B2–B3
A
5
Cursor is on cell B4.
60,000
6 - 21

Objective 4
6 - 22
Use the sales journal,
the cash receipts
journal,
and the accounts
receivable
subsidiary ledger.

Special Journals
● What are special journals?
● They are accounting journals used to
record one specific type of
transaction.
● What are some examples?
Sales Cash Receipts Payroll
Cash Payments
Purchases
6 - 23

Sales Journal Page 5
Date
Invoice
Number
Account
Debited
Account
Number
Post
Ref. Amount
Jan. 2 201 Joe Co. 120-122 ✓ 600.00
Jan. 2 202 May Co. 120-033 ✓ 700.00
Jan. 2 203 XYZ Co. 120-111 ✓ 900.00
TOTAL
120 / 410
2,200.00
6 - 24
Using the Sales Journal

Sales Journal Page 5
Date
Invoice
Number
Account
Debited
Account
Number
Post
Ref. Amount
Jan. 2 203 XYZ Co. 120 -111 ✓ 900.00
TOTAL 2,200.00
120 / 410
General Ledger
Account: Accounts Receivable Account Number: 120
Date Description Post Ref Debit Credit Balance
Jan. 2 Sales SJ5 2,200 2,200
6 - 25

Page 5
Invoice Account
Sales Journal
Account
Post Amount
900.00
Date Number Debited Number
Ref. Jan. 2 203 XYZ Co.
120-111✓
TOTAL 2,200.00 120/410
General Ledger
Account Number: 410
Credit Balance Jan. 2
Account: Credit Sales
Date Description Post Ref
Debit
Sales SJ5 2,200 2,200
6 - 26

Subsidiary Ledger
6 - 27
● A subsidiary ledger is often used to
provide details on individual
balances of...
– customers (accounts receivable)
and...
– suppliers (accounts payable).

A Control Account
6 - 28
● What is a control account?
● It is the general ledger account.
● It equals the sum of the individual
account balances in a subsidiary ledger.

Debits Credits
Sales Accounts Sales
Date Cash Revenue
Discounts
Receivable
200 200
Jan. 2
11 882 18 900
30 800 800
(101)
311,882 18 900
1,000
(420) (112) (410)
Cash Receipts Journal — Page
6
6 - 29

Accounts Receivable
XYZ Company Subsidiary Ledger
Date
Jrnl.
Ref. Debit Credit Balance
Jan. 2 S.5 900 900
11 CR.6 900 -0-
6 - 30

General Ledger
Cash No. 101
Date
Jrnl.
Ref. Debit Credit
Debit
Balance
Jan. 31 CR.6 1,882
6 - 31

Cash Receipts Journal
6 - 32
● Additional columns are provided to enter
other account descriptions and
amounts.
● Cash receipts amounts affecting subsidiary
ledger accounts are posted daily to keep
customer balances up to date.
● At month end, foot and crossfoot the journal
and post to the general ledger.

Objective 5
6 - 33
Use the purchase journal, the
cash payments journal,
and the accounts payable
subsidiary ledger.

Purchases Journal
6 - 34
● This is designed to account for all
purchases of inventory, supplies,
services, and other assets on account.

Purchases Journal
6 - 35
● Cash purchases are recorded in the
cash payments journal.
● At month end the journal is footed
(totaled) and crossfooted.
● Posting to the general ledger is similar
to posting from sales and cash
receipts journals.

Cash Payments Journal
6 - 36
● Most payments are by check and are
recorded in the cash payments
journal.
● The cash payments journal is also
called:
– cheque register
– cash disbursements journal

Cash Payments Journal
6 - 37
● This has columns for:
– Date
– Cheque number (or transfer number)
– Account Debited
– Debits;
– Other Accounts, Accounts payable
– Credits
– Discounts Received, Cash at Bank

General Journal
6 - 38
● Special journals save much time in
recording repetitive transactions and
posting to the ledger.
● However, some transactions do not fit
into any of the special journals.

General Journal
6 - 39
● Every accounting system needs a
general journal.
● What entries are recorded in the
general journal?
– depreciation
– expiration of prepaid insurance
– accrual of salaries payable
– adjusting and closing entries

General Journal
6 - 40
● Many companies record sales returns
and allowances and purchase returns
in the general journal.
● A credit note (or credit memo) is the
document issued by the seller for
a credit to a customer’s Accounts
Receivable.

Purchase Returns and
Allowances
6 - 41
● A debit note or debit memorandum is
the business document that states
that the buyer no longer
owes the seller for the amount of the
returned purchases.
● The buyer debits the Accounts Payable
to the seller and credits Inventory.

Balancing the Ledgers
6 - 42
● At the end of the accounting period:
● Total debits and credits of account
balances in the general ledger
are equal.
● Control account balances are equal to
the sum of the appropriate
subsidiary ledger accounts.

End of Chapter 6
6 - 43

Accounting Information Systems CAPITULO 7.pptx

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