Accounting Information
Systems
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Accrual Basis
◦ When it happens
◦
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Cash Basis
◦ When paid
◦ Mostly Service type business
 Dentist, Doctor, Lawyers
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1/10
Places an order
 Record in purchase order file to track what has been
requested and what has been ordered ( managerial) but
not in financial accounting records.
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2/15
Receives desk and bill
 Record the exchange of assets --you now have the desk
and the cost of the desk, exact amount of the bill.
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3/1
Pays the bill
 Writes a check and sends it to the vendor.
COST
◦Original Cost-
“Historical”
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Classification:
Assets= Liabilities+Stk Equity+Revenue-Expense
Accounts:
Cash, A/R, Supplies, Inventory
A/P, Mortgage Payable, X Payable,Unearned X
Common Stock, Dividends, Retained Earnings
Sales, Services Performed
Rent X, Wages X,
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Chart or List
of the Accounts
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Chart of Accounts-
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◦ Lists accounts that can be used in recording a
business transaction. CFO approval to open an
account.
Revenue – Expenses = Net Income
Who gets the net income? Stockholder
Net Income goes to Retained Earnings
Dividends reduces Retained Earnings and goes
to Stockholders
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A. A/P
B.Supplies
C. Dividend D. Fees EarnedE. Supplies X F. A/R
G. Unearned RevenueH. Equipment -
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Double - TWO (2)
◦ Every entry must have at least two entries or
accounts
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____Debit_______________Credit_______
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Washington D.C.
AC/DC
 All
transactions must have
 1 Debit
 1 Credit
A=L+SE+R-E
 Dr
Cr
Cr
Cr
Dr
A+E+Div
Dr
Normal
Normal
Balance
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= L+SE+R
Cr
Balance
CLASS
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Cash
Wages Expense
A/R
Common Stock
Service Revenue
Prepaid Rent
A/P
Investments
NORM BAL
CLASS
Bonds Payable
Income Taxes Exp
Land
Supplies Exp
Prepaid Insurance
Utilities Exp
Fees Earned
Dividends
Wages Payable
NORM BAL
CLASS
Unearned Revenue
Office Equipment
Rent Payable
Notes Receivable
Interest Expense
Notes Payable
Supplies
Interest Receivable
Rent Expense
NORM BAL
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What did you buy or receive
How did you or your customer pay for it.
What accounts do you use
What is it’s classification
What its normal balance.
Did you increase it - same as normal balance
Did you decrease it-opposite of normal
balance
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4 steps:
General Journal
Post to General Ledger or T-accounts
From GL do a Trial Balance
From Trial Balance do Financial Statements
May 2
5
7
19
22
25
31
Cash
Common Stock
Office Equipment
Cash
Supplies
Accounts Payable
Cash
Program Service Rev (Earned
Cash
Unearned Program Service Rev
Rent Expense
Cash
Accounts Receivable
Program Service Revenue
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Cash
Equipment
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2000 | 300
300 |
3000 | 700
1000
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5000
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A/P
150 |
700|
Unearned Rev
| 1000
A/R
800 |
Supplies
Office
150|
Common Stock
Prog Svc Rev
Rent Expense
| 2000
|3000
| 800
3800
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Report :Does the equation balance-- trial
Normal Balance must be maintained
Accounting equation vertically
A
Dr
L
Cr
SE
Cr
R
Cr
E
Dr
XX
XX
Comaque Shoe Repair Service, Inc.
Trial Balance
June 30, 20XX
Cash
$4,210
Repair Supplies
500
Repair Equipment
1,900
A/P
$ 300
Common Stock
5,900
Dividends
600
Repair Fees Earned
1,860
Salaries Expense
450
Rent Expense
400
_____
$8,060
$8,060
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Transposition
950 to 590
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Slides
1000 to 100
All divisable by 9 or numbers add to 9
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E2-10 pg 93
E2-13 pg 94
HOMEWORK
P2A, P3A, P5A, P7A, P9A