Accounting Information Systems pdf

Accounting Information
Systems
Chapter
7

Describe an effective
accounting
information system.
Objective 1

Control
Compatibility
Flexibility
Cost/benefit relationship
Basic Features

Basic Features
✔
Internal controls are the methods and
procedures used to authorize transactions
and safeguard assets.
✔
Compatibility means that the system works
smoothly with operations, personnel, and
the organizational structure.

Basic Features
✔
Flexibility relates to the system’s ability to
accommodate changes in the organization.

✔
A cost/benefit relationship indicates that the
cost of controls do not exceed their value to
the organization.

Company
Personnel
Hardware
Software
Computerized Accounting
System

Computerized 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.

Objective 2
Understand both
computerized and manual
accounting systems.

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

Computerized
Accounting System
entered,
edited
printed to
paper,
screen
ACCOUNTING RECORDS
Journals,
Ledgers,
Other records
SOFTWARE
PROCESSING
PERSONNEL
input transactions, request
reports, protect records
REPORTSDATA
INPUT
OUTPUT
posted
accessed for

reports
HARDWARE

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.

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

Menu-Driven Accounting
System
General Receivables Payables Payroll Reports
Posting
Account Maintenance
COMPUTERIZED
ACCOUNTING
SYSTEM
Use arrow keys to make choice.
Press <return> to access choice.

Press F7 <escape> to leave menu.
MAIN
Inventory Utilities
Closing

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

Objective 3
Understand how spreadsheets
are used in accounting.

Integrated Accounting Systems

✔
Computerized accounting systems are
organized 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
✔
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.

Ana’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?

Ana’s Boutique Example
✔
May cash sales $ 50,000
+
Collection of April’s credit sales 60,000
+
Collection of May’s credit sales 100,000
=
Total $210,000
✔
Spreadsheets make computations like these
easier.

Spreadsheet Example
Income Statement:
Revenues 100,000
Expenses 60,000
Net Income
Row: 1
2
3
4
5
Column: A B C
Formula for B4: =B2–B3
Cursor is on cell B4.

40,000

Objective 4
Use the sales journal,
the cash receipts journal,
and the accounts receivable
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 DisbursementsPurchases

Sales Journal Page 5
Invoice Account Account Post
Date Number Debited Number 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 2,200.00
120/410
Sales Journal Page 5
Invoice Account Account Post

Date Number Debited Number 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 2,200.00
120/410
Using the Sales Journal

Sales Journal Page 5
Invoice Account Account Post
Date Number Debited Number Ref. Amount
Jan. 2 203 XYZ Co. 120-111 ✓ 900.00
TOTAL 2,200.00
120/410
Sales Journal Page 5
Invoice Account Account Post
Date Number Debited Number 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
Using the Sales Journal

Using the Sales Journal
Sales Journal Page 5
Invoice Account Account Post

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