Chapter
ACCT 201 ACCT 201 ACCT 201
1
Accounting
Information
System
Dr. BALAMURUGAN MUTHURAMAN
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The Accounting System:
A Conceptual Overview
Operating Environment
Entity B
Entity C
Business Entity A
System Inputs:
Measurable
Transactions
and Events
Process and
Summarize
Entity D
System Outputs:
Financial
Statements
and Reports
Entity E
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Financial Reporting Environment
FASB
GAAP
Financial
Statements
Preparers
Audit
Report
Decision makers
Auditors
ASB
GAAS
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Independent Auditor
1
A
A
3
P
G
Auditors
Income Statement
Balance Sheet
S
G
Statement of
Cash Flows
A
A
Lends Credibility
4
Management
Prepares
Management
Basic Mistrust
Users
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International Accounting Principles
Despite our growing global economy,
countries continue to maintain their
unique set of acceptable accounting
practices.
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ACCT 201 ACCT 201 ACCT 201
Learning
Objective
Identify, explain, and apply
accounting principles.
Conceptual
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A business
continues operation
instead of being
closed or sold.
A business is
accounted for
separately from its
owner(s).
Financial Statement
information is
supported by
independent,
unbiased evidence.
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Express
transactions and
events in monetary
units.
Financial statements are based on
actual costs incurred in business
transactions.
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ACCT 201 ACCT 201 ACCT 201
Accounting
Information
System
Text Section:
Transactions, Documents, and
Accounts (p. 41)
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Learning
Objective
Identify, explain, and apply
accounting principles.
Conceptual
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The Accounting Process
Transaction
or event
Source
documents
Exh.
2.2
Analysis
Reporting
Trial balance
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Recording &
posting
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Transactions and Events
Exchanges of economic consideration
between two parties.
External Transactions
occur between the
organization and an
outside party.
Internal Transactions
occur within the
organization.
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Accounting Information System
Boundary
Ongoing events in
world
Recording
Data Bank
Information
Classifying
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ACCT 201 ACCT 201 ACCT 201
C4
Learning
Objective
Describe source documents
and their purpose.
Conceptual
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Source Documents
Other
Invoices
Bank Statement
Journal
Check
Stubs
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ACCT 201 ACCT 201 ACCT 201
Learning
Objective
Describe an account and
its uses in recording
transactions.
Conceptual
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ACCT 201 ACCT 201 ACCT 201
Account
A storage unit used to classify and
summarize money measurements of
business activity of a similar nature.
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ACCT 201 ACCT 201 ACCT 201
The Account
Detailed record of increases
and decreases in specific
assets, liabilities, equities,
revenues, or expenses.
=======================
Separate accounts are maintained for
each item of importance.
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The General Ledger
Accts Rec.
Inventory
Cash
General
Ledger
Notes Pay.
Revenue
Mortgage
Expenses
Accts Pay.
Retained
Earnings
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Account Title
Right Side
Left Side
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The Formal
Account
The Balance Column
Ledger
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Account Title
Date
Item
Account No. ###
Post
Ref
Balance
Debit
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Credit Debit Credit
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Assets
=
Liabilities
+
Owners’
Equity
Capital
Stock
The
Accounting
Equation
A = L + OE
Retained
Earnings
Revenue
=
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-Expenses
Net
Income
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