1. 7 Accounting Information Systems CHAPTER
PowerPoint Slides to accompany
Fundamental Accounting Principles, 14ce
Prepared by
Joe Pidutti, Durham College

2. © 2013 McGraw-Hill Ryerson Limited.
Learning Objectives
Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the components of an AIS. (LO1)
Explain the goals and uses of special journals. (LO2)
Describe the use of controlling accounts and subledgers. (LO3)
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Learning Objectives
Journalize and post transactions using special journals. (LO4)
Journalize and post transactions using special journals in a periodic inventory system. (Appendix 7A) (LO5)
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4. Management Information Systems
A system designed to collect and process data within an organization for the purpose of providing users with information.
LO 1
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5. Management Information System
Internal
External
Community
Competitors
Customers
Government
Industry
Suppliers
Sales and Marketing System
Finance System
Accounting Information System
Human Resources System
Production System
LO 1
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6. Accounting Information Systems (AIS)
A group of components that collect and process raw financial data into timely, accurate, relevant, and cost-effective information to meet the purposes of internal and external users.
LO 1
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7. Components of an AIS Inputs Outputs LO 1 Feedback Loop
Accounting Information System
Inputs
Source Documents
Accounts Receivable
Accounts Payable
Outputs
Reports/ Information to Internal/ External Users
PP & E
Payroll
LO 1
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8. © 2013 McGraw-Hill Ryerson Limited.
Special Journals
Most organizations use Special Journals to enhance efficiency of transaction processing.
Types
Sales Journal
Cash Receipts Journal
Purchases Journal
Cash Disbursements Journal
LO 2
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Subledgers
A listing of individual accounts with a common characteristic.
Common Subledgers
Accounts Receivable
Accounts Payable
Merchandise Inventory
LO 3
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10. Accounts Receivable Subledger
A separate subledger account is used to show how much each individual customer owes.
LO 3
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11. Accounts Receivable Subledger
After all items are posted, the balance in the Accounts Receivable controlling account must equal the sum of the balances in the subledger.
LO 3
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12. © 2013 McGraw-Hill Ryerson Limited.
Mini-Quiz
A subsidiary ledger:   
A) Includes transactions not covered by special journals.  
B) Is a listing of all of the accounts of a business.  
C) Is a listing of individual accounts with a common characteristic.  
D) Is a listing of all accounts with balances.  
E) Is a listing of all special journals.
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13. © 2013 McGraw-Hill Ryerson Limited.
Mini-Quiz
A subsidiary ledger:   
A) Includes transactions not covered by special journals.  
B) Is a listing of all of the accounts of a business.  
C) Is a listing of individual accounts with a common characteristic.  
D) Is a listing of all accounts with balances.  
E) Is a listing of all special journals.
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Sales Journal
The sales journal is used to record sales of merchandise on credit.
LO 4
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15. Sales Journal - Example
On February 2, Jason Henry purchased $450 of merchandise on account from Outdoors Unlimited. The goods originally cost Outdoors $315. Record the entry in the Sales Journal.
(Assume the use of a perpetual merchandise inventory system.)
LO 4
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16. © 2013 McGraw-Hill Ryerson Limited.
Sales Journal
Since each transaction yields a debit to Accounts Receivable and a credit to Sales, we need only one column for these two accounts. This column total is posted monthly.
LO 4
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17. © 2013 McGraw-Hill Ryerson Limited.
Sales Journal
Similarly, each transaction yields a debit to Cost of Goods Sold and a credit to Merchandise Inventory. Therefore, these accounts can also be included together in one column. This column total would also be posted monthly.
LO 4
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18. Sales Journal-Posting
Daily, each transaction is posted to the appropriate Accounts Receivable subledger account.
LO 4
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19. Sales Journal-Posting
A  in the PR column indicates the transaction has been posted to the subledger account.
LO 4
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20. Here is the Sales Journal after recording some additional sales.
LO 4
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21. On Feb. 28th , post the column total to Accounts Receivable and Sales.
Sales Journal
On Feb. 28th , post the column total to Accounts Receivable and Sales.
2014
Feb S , ,150
2014
Feb S , ,150
LO 4
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22. Now post to the COGS and Merchandise Inventory accounts …
Sales Journal
Now post to the COGS and Merchandise Inventory accounts …
2014
Feb S , ,750
2014
Feb S , ,600
LO 4
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23. … and include the posting references.
Sales Journal
… and include the posting references.
2014
Feb S , ,750
2014
Feb S , ,600
LO 4
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24. © 2013 McGraw-Hill Ryerson Limited.
Testing the Ledger
The Accounts Receivable controlling account and the subledger are in balance.
LO 4
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25. Sales Returns and Allowances
If a company has few sales returns, they may record them in the General Journal.
But, if a company has lots of sales returns, they may use a Sales Returns and Allowances Journal.
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LO 4

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Cash Receipts Journal
The cash receipts journal is used to record all receipts of cash.
LO 4
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27. Cash Receipts Journal - Example
Categories of Cash Receipts
Cash from cash sales
Cash from credit customers
Cash from other sources
LO 4
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28. © 2013 McGraw-Hill Ryerson Limited.
Cash Receipts Journal
LO 4
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29. © 2013 McGraw-Hill Ryerson Limited.
Purchases Journal
The Purchases Journal is used to record all purchases on credit.
LO 4
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30. © 2013 McGraw-Hill Ryerson Limited.
Purchases Journal
LO 4
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31. Cash Disbursements Journal
The Cash Disbursements Journal is used to record all payments of cash.
Outdoors Unlimited
LO 4
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32. Cash Disbursements Journal
LO 4
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33. © 2013 McGraw-Hill Ryerson Limited.
General Journal
Used for all transactions not recorded in a special journal.
Closing entries
Adjusting entries
Correcting entries
Other entries
LO 4
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34. © 2013 McGraw-Hill Ryerson Limited.
Mini-Quiz
Give the name of the journal in which the following transactions should be recorded.
Purchased equipment on credit.
Sold merchandise for cash.
Paid for supplies that were purchased on account.
Sold merchandise on account. PJ
CRJ
CDJ SJ
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35. Special Journals Under a Periodic System-Appendix 7A
Recording and posting is similar to a perpetual system.
Some of the columns change in a periodic system.
LO 5
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36. Sales Journal — Periodic System
The column for Cost of Goods Sold and Merchandise Inventory is not needed with the periodic system.
LO 5
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37. Cash Receipts Journal Periodic System
The column for Cost of Goods Sold and Merchandise Inventory are not needed with the periodic system.
LO 5
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38. Purchases Journal — Periodic System
The Merchandise Inventory column in the perpetual system is replaced with Purchases column in the periodic system.
LO 5
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39. Cash Disbursements Journal Periodic System
The Merchandise Inventory column in the perpetual system is replaced with Purchases Discounts column in the periodic system.
LO 5
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Review
What is the purpose of special journals?
Special journals help reduce the costs related to the time and effort of posting accounts.
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Review
Why should sales to and receipts of cash from credit customers be recorded and posted daily? Daily recording and posting of credit sales and cash receipts from customers provides up-to-date information used in decisions about granting credit to customers. Also, up-to-date account balances are needed if customers inquire about the amount of their balances.
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End of Chapter
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