Presentation on theme: "Accounting Information Systems"— Presentation transcript:
1Accounting Information Systems Chapter 6HORNGREN ♦ HARRISON ♦ BAMBER ♦ BEST ♦ FRASER ♦ WILLETT
2ObjectivesDescribe the features of an effective accounting information system.Understand how computerised and manual accounting systems work.Understand how spreadsheets are used in accountingUse the sales journal, the cash receipts journal and the accounts receivable subsidiary ledgerUse the purchases journal, the cash payments journal and the accounts payable subsidiary ledger
3Describe the features of an effective accounting Objective 1Describe the features ofan effective accountinginformation system.
5Basic FeaturesInternal 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.
6Basic FeaturesFlexibility 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.
7Computerised Accounting System HardwareSoftwareCompanyPersonnel
8Computerised Accounting System 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.
9computerised and manual accounting systems work. Objective 2Understand how bothcomputerised and manualaccounting systems work.
10Three Stages of Data Processing Input(Source documents)Processing(Financialstatements)Output
12Designing 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.
13Menu-Driven Accounting System Computer systems are organised by function or task.Computer systems usually have a choice of processing options on a “menu.”
14Menu-Driven Accounting System GeneralReceivablesPayablesInventoryPayrollReportsPostingCOMPUTERISEDACCOUNTINGSYSTEMAccount MaintenanceClosingUse arrow keys to make choice.MAINPress <return> to access choice.Press F7 <escape> to leave menu.
15Preparing Accounting Reports TrialBalanceFinancialStatementsAccountsReceivable DetailAccountsPayable DetailDaily CashReportStatement of Financial PerformanceStatement of Owners’ EquityStatement of Financial PositionStatement of Cash FlowsUse arrow keys to make choice.REPORTSPress <return> to access choice.Press F7 <escape> to leave menu.
16Understand how spreadsheets Objective 3Understand how spreadsheetsare used in accounting.
17Integrated Accounting Systems Computerised accounting systems are organised by modules.These modules are separate but integrated units.A sales transaction entry will update two modules:Accounts Receivable / SalesInventory / Cost of Goods Sold
18Ana’s Boutique Example 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.
19Ana’s Boutique Example 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?
20Ana’s Boutique Example May cash sales $ 50,000Collection of April’s credit sales ,000Collection of May’s credit sales 100,000Total $210,000Spreadsheets make calculations like these easier.
21Spreadsheet Example Formula for B4: =B2–B3 Column: A B C Row: 1 2 3 4 5Statement of Financial Performance:Revenues 150,000Expenses ,000Net Profit60,000Cursor is on cell B4.
22the cash receipts journal, and the accounts receivable Objective 4Use the sales journal,the cash receipts journal,and the accounts receivablesubsidiary ledger.
23Special Journals What are special journals? They are accounting journals used to record one specific type of transaction.What are some examples?SalesCash ReceiptsPayrollPurchasesCash Payments
24Using the Sales Journal Sales Journal Page 5Invoice Account Account PostDate Number Debited Number Ref. AmountJan Joe Co Jan May Co Jan XYZ Co TOTAL ,200.00120 / 410
25Using the Sales Journal Sales Journal Page 5Invoice Account Account PostDate Number Debited Number Ref. AmountJan XYZ Co TOTAL ,200.00120 / 410General Ledger Account: Accounts Receivable Account Number: Date Description Post Ref Debit Credit Balance Jan. 2 Sales SJ5 2, ,200
26Using the Sales Journal Sales Journal Page 5Invoice Account Account PostDate Number Debited Number Ref. AmountJan XYZ Co TOTAL ,200.00120/410General Ledger Account: Credit Sales Account Number: Date Description Post Ref Debit Credit Balance Jan. 2 Sales SJ , ,200
27Subsidiary LedgerA subsidiary ledger is often used to provide details on individual balances of...customers (accounts receivable) and...suppliers (accounts payable).
28A Control Account What is a control account? It is the general ledger account.It equals the sum of the individual account balances in a subsidiary ledger.
32Cash Receipts JournalAdditional 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.
33Use the purchase journal, the and the accounts payable Objective 5Use the purchase journal, thecash payments journal,and the accounts payablesubsidiary ledger.
34Purchases JournalThis is designed to account for all purchases of inventory, supplies, services, and other assets on account.
35Purchases JournalCash 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.
36Cash Payments JournalMost payments are by check and are recorded in the cash payments journal.The cash payments journal is also called:cheque registercash disbursements journal
37Cash Payments Journal This has columns for: Date Cheque number (or transfer number)Account DebitedDebits;Other Accounts, Accounts payableCreditsDiscounts Received, Cash at Bank
38General JournalSpecial 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.
39General Journal Every accounting system needs a general journal. What entries are recorded in the general journal?depreciationexpiration of prepaid insuranceaccrual of salaries payableadjusting and closing entries
40General JournalMany 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.
41Purchase Returns and Allowances 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.
42Balancing the Ledgers 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.