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Chapter 7 Subsidiary Ledgers Special Journals. 1.Identify the basic concepts of an accounting information system. 2.Describe the nature and purpose of.

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Presentation on theme: "Chapter 7 Subsidiary Ledgers Special Journals. 1.Identify the basic concepts of an accounting information system. 2.Describe the nature and purpose of."— Presentation transcript:

1 Chapter 7 Subsidiary Ledgers Special Journals

2 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

3 Computerized accounting systems Manual accounting systems ExampleAdvantages Sales journal Cash receipts journal Purchases journal Cash payments journal Effects of special journals on general journal Basic Concepts of Accounting Information Systems Subsidiary Ledgers Special Journals Accounting Information Systems

4 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 SO 1 Identify the basic concepts of an accounting information system.

5 Software programs (functions include sales, purchases, receivables, payables, cash receipts and disbursements, and payroll). Generate financial statements. Advantages:  Typically enter data only once.  Many human errors are eliminated.  More timely information. Computerized Accounting Systems Basic Concepts of AIS SO 1 Identify the basic concepts of an accounting information system.

6 Special Journals 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

7 Illustration 7-3 Subsidiary Ledgers SO 2 Describe the nature and purpose of a subsidiary ledger. Relationship of general ledger and subsidiary ledgers

8 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 SO 2 Describe the nature and purpose of a subsidiary ledger. Advantages of Subsidiary Ledgers

9 Special Journals 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.

10 Special Journals 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

11 Special Journals 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

12 Special Journals 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

13 Special Journals SO 4 Indicate how companies post a multi-column journal. Illustration 7-13 Daily postings are made from the purchases journal to the accounts payable subsidiary ledger. Purchases Journal

14 Special Journals SO 4 Indicate how companies post a multi-column journal. Illustration 7-13 Purchases Journal At the end of the accounting period, the company posts totals to the general ledger.

15 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-column journal.

16 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 SO 4 Indicate how companies post a multi-column journal.

17 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 SO 4 Indicate how companies post a multi-column journal.

18 ASSIGNMENTS


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