Accounting
Information
Systems
CHAPTER
7
PowerPoint Slides to accompany
Fundamental Accounting Principles, 14ce
Prepared by
Joe Pidutti, Durham College
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)
1.
2.
3.
2
© 2013 McGraw-Hill Ryerson Limited.
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)
4.
5.
3
© 2013 McGraw-Hill Ryerson Limited.
Management Information
Systems
A system designed to collect and process
data within an organization for the purpose
of providing users with information.
4
© 2013 McGraw-Hill Ryerson Limited.
LO 1
Management Information System
Internal
External
Sales and
Marketing
System
Community
Competitors
Production
System
Finance
System
Customers
Government
Industry
Human
Resources
System
5
Accounting
Information
System
© 2013 McGraw-Hill Ryerson Limited.
Suppliers
LO 1
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.
6
© 2013 McGraw-Hill Ryerson Limited.
LO 1
Components of an AIS
Feedback Loop
Accounting
Information
System
Inputs
Source
Documents
7
Accounts
Receivable
Accounts
Payable
PP & E
Payroll
© 2013 McGraw-Hill Ryerson Limited.
Outputs
Reports/
Information
to Internal/
External
Users
LO 1
Special Journals
Most organizations use Special Journals
to enhance efficiency of transaction
processing.
Types
• Sales Journal
• Cash Receipts Journal
• Purchases Journal
• Cash Disbursements Journal
8
© 2013 McGraw-Hill Ryerson Limited.
LO 2
Subledgers
A listing of individual accounts with a
common characteristic.
Common Subledgers
• Accounts Receivable
• Accounts Payable
• Merchandise Inventory
9
© 2013 McGraw-Hill Ryerson Limited.
LO 3
Accounts Receivable Subledger
ACCOUNTS RECEIVABLE LEDGER
Adams Company
Date
PR
Debit
Credit Balance
Jan. RECEIVABLE
1 S5
500
ACCOUNTS
LEDGER
500
Baine Company
Date
PR
Debit
Credit Balance
Jan. RECEIVABLE
16 S5
1,000
ACCOUNTS
LEDGER
1,000
Cook Company
Date
Jan.
PR
25
S5
Debit
Credit Balance
415
415
A separate subledger account is
used to show how much each
individual customer owes.
10
© 2013 McGraw-Hill Ryerson Limited.
LO 3
Accounts Receivable Subledger
ACCOUNTS RECEIVABLE LEDGER
Adams Company
After all items
Date
PR
Debit Credit Balance
are posted,
Jan.
1 S5 LEDGER
500
500
ACCOUNTS
RECEIVABLE
the balance in
Baine Company
the Accounts
Date
PR
Debit Credit Balance
Receivable
Jan.
16 S5 LEDGER
1,000
1,000
ACCOUNTS
RECEIVABLE
controlling
Cook Company
account must Date
PR
Debit Credit Balance
equal the sum Jan. 25 S5
415
415
of the
GENERAL LEDGER
balances in
Accounts Receivable
No. 106
the subledger.
Date
PR Debit Credit Balance
Jan. 31 S5
1,915
1,915
© 2013 McGraw-Hill Ryerson Limited.
11
LO 3
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.
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.
13
© 2013 McGraw-Hill Ryerson Limited.
Sales Journal
The sales journal is used to record sales
of merchandise on credit.
14
© 2013 McGraw-Hill Ryerson Limited.
LO 4
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.)
15
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Sales Journal
SALES JOURNAL
Account
Debited
Date
2014
Feb. 2 Jason Henry
Page 3
Dr. COGS
Invoice
Dr. A/R Cr.Merchandise
Number PR Cr. Sales
Inventory
307
450
315
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.
© 2013 McGraw-Hill Ryerson Limited.
16
LO 4
Sales Journal
SALES JOURNAL
Account
Debited
Date
2014
Feb. 2 Jason Henry
Page 3
Dr. COGS
Invoice
Dr. A/R Cr.Merchandise
Number PR Cr. Sales
Inventory
307
450
315
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.
© 2013 McGraw-Hill Ryerson Limited.
17
LO 4
Sales Journal-Posting
SALES JOURNAL
Account
Debited
Date
2014
Feb. 2 Jason Henry
Daily, each
transaction is posted
to the appropriate
Accounts Receivable
subledger account.
18
Invoice
Number PR
307
Page 3
Dr. COGS
Dr. A/R Cr.Merchandise
Cr. Sales
Inventory
ü
450
315
ACCOUNTS RECEIVABLE SUBLEDGER
Jason Henry
Date
Feb.
PR
2
S3
© 2013 McGraw-Hill Ryerson Limited.
Debit
450
Credit Balance
450
LO 4
Sales Journal-Posting
SALES JOURNAL
Account
Debited
Date
2014
Feb. 2 Jason Henry
A ü in the PR
column indicates
the transaction has
been posted to the
subledger account.
Page 3
Dr. COGS
Invoice
Dr. A/R Cr.Merchandise
Number PR Cr. Sales
Inventory
307
450
315
ACCOUNTS RECEIVABLE SUBLEDGER
Jason Henry
Date
PR
Debit
Credit Balance
2014
Feb.
19
ü
2
S3
© 2013 McGraw-Hill Ryerson Limited.
450
450
LO 4
Sales Journal
SALES JOURNAL
Date
2014
Feb. 2
7
13
15
Account
Debited
Invoice
Number
Jason Henry
Albert Co.
Bam Moore
Paul Roth
307
308
309
310
PR
Page 3
Dr. COGS
Dr. A/R Cr.Merchandise
Cr. Sales
Inventory
ü
ü
ü
ü
450
500
350
200
315
355
260
150
Here is the Sales Journal after
recording some additional sales.
20
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Sales Journal
SALES JOURNAL
Date
2014
Feb.
2
7
13
15
22
25
28
28
Account
Debited
Invoice
Number
Jason Henry
Albert Co.
Bam Moore
Paul Roth
Jason Henry
Frank Booth
Albert Co.
Totals
307
308
309
310
311
312
313
PR
Dr. A/R
Cr. Sales
ü
ü
ü
ü
ü
ü
ü
450
500
350
200
225
175
250
2,150
(106/413)
Page 3
Dr. COGS
Cr. Merchandise
Inventory
315
355
260
150
155
95
170
1,500
(502/119)
GENERAL LEDGER
On Feb. 28th , post the
Accounts Receivable
No. 106 column total to Accounts
Date
PR Debit Credit Balance Receivable and Sales.
2014
Feb. 28 S3 2,150
2,150
GENERAL LEDGER
Sales
Date
2014
21
PR
Feb . 28 S3
© 2013 McGraw-Hill Ryerson Limited.
Debit
Credit
No. 413
Balance
2,150
2,150
LO 4
Sales Journal
SALES JOURNAL
Date
Account
Debited
Invoice
Number
Jason Henry
Albert Co.
Bam Moore
Paul Roth
Jason Henry
Frank Booth
Albert Co.
Totals
307
308
309
310
311
312
313
2014
Feb.
2
7
13
15
22
25
28
28
GENERAL LEDGER
Merchandise Inventory
Date
PR Debit Credit
2014
Feb. 28
S3
1,500
PR
ü
ü
ü
ü
ü
ü
ü
Dr. A/R
Cr. Sales
Page 3
Dr. COGS
Cr.Merchandise
Inventory
450
500
350
200
225
175
250
2,150
(106/413)
Now post to the COGS and
Merchandise Inventory
accounts …
14,750
No. 119
Balance
GENERAL LEDGER
Cost of Goods Sold
Date
PR Debit Credit
2014
22
315
355
260
150
155
95
170
1,500
(502/119)
Feb. 28
S3
© 2013 McGraw-Hill Ryerson Limited.
1,500
No. 502
Balance
15,600
LO 4
Sales Journal
SALES JOURNAL
Date
2014
Feb.
2
7
13
15
22
25
28
28
Account
Debited
Invoice
Number
Jason Henry
Albert Co.
Bam Moore
Paul Roth
Jason Henry
Frank Booth
Albert Co.
Totals
307
308
309
310
311
312
313
GENERAL LEDGER
Merchandise Inventory
Date
PR Debit Credit
2014
Feb. 28 S3
1,500
PR
ü
ü
ü
ü
ü
ü
ü
Dr. A/R
Cr. Sales
Page 3
Dr. COGS
Cr.Merchandise
Inventory
450
500
350
200
225
175
250
2,150
(106/413)
No. 119 … and include the posting
Balance
references.
14,750
GENERAL LEDGER
Cost of Goods Sold
Date
PR Debit Credit
2014
23
315
355
260
150
155
95
170
1,500
(502/119)
Feb. 28
S3
© 2013 McGraw-Hill Ryerson Limited.
1,500
No. 502
Balance
15,600
LO 4
Testing the Ledger
Schedule of Accounts Receivable
February 28, 2014
Frank Booth
$
175
Jason Henry
675
Bam Moore
350
Paul Roth
200
Albert Co.
750
Total accounts receivable $ 2,150
The Accounts
Receivable
controlling
account and
the subledger
are in balance.
GENERAL LEDGER
Accounts Re ce ivable
Date
PR
De bit
No. 106
Cre dit
Balance
2014
Fe b
28 S3
2,150
24
© 2013 McGraw-Hill Ryerson Limited.
2,150
LO 4
Sales Returns and Allowances
If a company has few sales returns, they may record
them in the General Journal.
GENERAL JOURNAL
Date
2014
Description
Mar 7 Sales Returns and Allowances
Accounts Receivable--Bam Moore
Page 34
PR
414
Debit
Credit
10
106/ ü
Merchandise Inventory
119
Cost of Goods Sold
502
10
6
6
But, if a company has lots of sales returns, they may
use a Sales Returns and Allowances Journal.
25
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Cash Receipts Journal
The cash receipts journal is used to
record all receipts of cash.
26
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Cash Receipts Journal - Example
CASH RECEIPTS JOURNAL
Date
2014
Feb. 7
12
14
17
20
21
22
23
25
28
28
Accounts Credited
Sales
Jason Henry
Sales
Albert Co.
Note payable
Sales
Interest revenue
Bam Moore
Paul Roth
Sales
Total
•
•
•
27
PR
Explanation
Cash sale
Invoice, Feb 2
Cash sale
Invoice, Feb 7
Note to bank
Cash sale
Bank account
Invoice, Feb 13
Invoice, Feb 17
Cash sale
Cash
Sales
Discount
Dr.
Dr.
4,450
441
3,925
490
750
4,700
250
343
196
4,225
19,770
(101)
Accts.
Rec.
Cr.
9
450
10
500
Sales
Cr.
Other
Accts.
Cr.
Page 2
COGS Dr.
Merchandise
Inventory Cr
4,450
3,150
3,925
2,950
750
4,700
3,400
250
7
4
350
200
30
(415)
1,500
(106)
4,225
17,300
(413)
Categories of Cash Receipts
Cash from cash sales
Cash from credit customers
Cash from other sources
© 2013 McGraw-Hill Ryerson Limited.
1,000
(x)
3,050
12,550
(502/119)
LO 4
Cash Receipts Journal
CASH RECEIPTS JOURNAL
Date
2014
Feb. 7
12
14
17
Accounts Credited
Sales
Jason Henry
Sales
Albert Co.
PR
ü
ü
Explanation
Cash sale
Invoice, Feb 2
Cash sale
Invoice, Feb 7
20
21
Note payable
Sales
245 Note to bank
22
23
25
28
28
Interest revenue
Bam Moore
Paul Roth
Sales
Total
409 Bank account
Cash sale
ü
ü
Invoice, Feb 13
Invoice, Feb 17
Cash sale
Cash
Dr.
4,450
441
3,925
490
Sales
Discount Accts. Rec.
Dr.
Cr.
Sales
9
450
10
500
750
4,700
250
343
196
4,225
19,770
(101)
Cr.
Other
Accts.
Cr.
Page 2
COGS Dr.
Merchandise
Inventory Cr
4,450
3,150
3,925
2,950
750
4,700
3,400
250
7
4
350
200
30
1,500
(415)
(106)
4,225
17,300
(413)
1,000
(x)
3,050
12,550
(502/119)
x
Amount is not posted individually to an account.
ü Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
28
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Purchases Journal
The Purchases Journal is used to
record all purchases on credit.
29
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Purchases Journal
PURCHASES JOURNAL
Date
2014
Feb 3
5
13
20
25
28
28
Account
Horung Supply Co
Ace Mfg. Co
Wynet & Co.
Smite Co.
Ace Mfg. Co
Store supplies/ITT Co.
Totals
Invoice
Date
Feb. 2
5
10
18
24
28
Terms
PR
ü
n/30
2/10,n/30
ü
2/10,n/30
ü
2/10,n/30
ü
2/10,n/30
ü
125/ ü
n/30
Page 1
Accts.
Payable
Cr.
350
200
150
300
100
225
1,325
(201)
Merchandise
Inventory Dr.
275
200
150
300
100
125
1,150
(505)
Office
Supplies
Dr.
Other
Accts.
Dr.
75
25
100
(124)
75
75
(X)
x
Amount is not posted individually to an account.
ü Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
30
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Cash Disbursements Journal
Outdoors Unlimited
31
The Cash
Disbursements
Journal is used to
record all
payments of cash.
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Cash Disbursements Journal
CASH DISBURSEMENTS JOURNAL
Date
Ch. No.
Payee
2014
Feb. 3
105 L & N Railroad
5
106 East Sales Co.
13
107 Ace Mfg. Co
20
108 Jerry Hale
25
109 Wynet & Co.
28
110 Smite Co.
28
Totals
Account Debited
Merchandise Inv.
Merchandise Inv.
Ace Mfg. Co.
Salaries expense
Wynet & Co.
Smite Co.
PR
Cash
Cr.
119
119
ü
622
ü
ü
15
25
196
250
147
294
927
(101)
Page 2
Merch.
Other
Accounts
Inventory Accounts Payable
Cr.
Dr.
Dr.
15
25
4
200
250
3
6
13
(119)
290
(X)
150
300
650
(201)
x
Amount is not posted individually to an account.
ü Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
32
© 2013 McGraw-Hill Ryerson Limited.
LO 4
General Journal
Used for all transactions not recorded
in a special journal.
•
•
•
•
33
Closing entries
Adjusting entries
Correcting entries
Other entries
© 2013 McGraw-Hill Ryerson Limited.
LO 4
Mini-Quiz
Give the name of the journal in which the following
transactions should be recorded.
Purchased equipment on credit.
PJ
Sold merchandise for cash.
CRJ
Paid for supplies that were purchased on
account.
Sold merchandise on account.
CDJ
34
© 2013 McGraw-Hill Ryerson Limited.
SJ
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.
35
© 2013 McGraw-Hill Ryerson Limited.
LO 5
Sales Journal — Periodic System
The column for
Cost of Goods
Sold and
Merchandise
Inventory is not
needed with the
periodic
system.
SALES JOURNAL
Date
2014
Feb. 2
7
13
15
22
25
28
Account
Debited
Invoice
Number
Jason Henry
Albert Co.
Bam Moore
Paul Roth
Jason Henry
Frank Booth
Albert Co.
307
308
309
310
311
312
313
28 Total
PR
Page 3
Dr. A/R
Cr. Sales
ü
450
500
350
200
225
175
250
ü
ü
ü
ü
ü
ü
2,150
(106/413)
36
© 2013 McGraw-Hill Ryerson Limited.
LO 5
Cash Receipts Journal
Periodic System
CASH RECEIPTS JOURNAL
Date
2014
Feb. 7
12
14
17
Accounts Credited
Sales
Jason Henry
Sales
Albert Co.
PR
ü
ü
Explanation
Cash sale
Invoice, Feb 2
Cash sale
Invoice, Feb 7
20
21
Note payable
Sales
245 Note to bank
22
23
25
28
28
Interest revenue
Bam Moore
Paul Roth
Sales
Total
409 Bank account
Cash sales
ü
ü
Invoice, Feb 13
Invoice, Feb 17
Cash sale
Cash
Dr.
Sales
Discount Accts. Rec.
Dr.
Cr.
Sales
4,450
441
3,925
490
4,450
9
450
10
500
3,925
750
4,700
250
343
196
4,225
19,770
(101)
Page 2
Other
Accts.
Cr.
Cr.
750
4,700
250
7
4
350
200
30
1,500
(415)
(106)
4,225
17,300
(413)
1,000
(x)
The column for Cost of Goods Sold and
Merchandise Inventory are not needed with the
periodic system.
37
© 2013 McGraw-Hill Ryerson Limited.
LO 5
Purchases Journal — Periodic System
PURCHASES JOURNAL
Date
2014
Feb 3
5
13
20
25
28
28
Account
Horung Supply Co
Ace Mfg. Co
Wynet & Co.
Smite Co.
Ace Mfg. Co
Store supplies/ITT Co.
Totals
Invoice
Date
Feb. 2
5
10
18
24
28
Terms
PR
Page 1
Accts.
Office
Payable Purchases Supplies
Cr.
Dr.
Dr.
ü
n/30
2/10,n/30
ü
2/10,n/30
ü
2/10,n/30
ü
2/10,n/30
ü
n/30
125/ ü
350
200
150
300
100
225
1,325
(201)
275
200
150
300
100
125
1,150
(505)
Other
Accts.
Dr.
75
25
100
(124)
75
75
x
The Merchandise Inventory column in the perpetual
system is replaced with Purchases column in the
periodic system.
38
© 2013 McGraw-Hill Ryerson Limited.
LO 5
Cash Disbursements Journal
Periodic System
CASH DISBURSEMENTS JOURNAL
Date
Ch. No.
Payee
2014
Feb. 3
105 L & N Railroad
5
106 East Sales Co.
13
107 Ace Mfg. Co
20
108 Jerry Hale
25
109 Wynet & Co.
28
110 Smite Co.
28
Totals
Account Debited
Merchandise Inv.
Merchandise Inv.
Ace Mfg. Co.
Salaries expense
Wynet & Co.
Smite Co.
PR
119
119
ü622
üü
Cash
Cr.
15
25
196
250
147
294
927
(101)
Page 2
Purchase
Other
Accounts
Discounts Accounts Payable
Cr.
Dr.
Dr.
15
25
4
200
250
3
6
13
(507)
290
x
150
300
650
(201)
The Merchandise Inventory column in the perpetual
system is replaced with Purchases Discounts
column in the periodic system.
39
© 2013 McGraw-Hill Ryerson Limited.
LO 5
Review
What is the purpose of special journals?
Special journals help reduce the costs
related to the time and effort of posting
accounts.
40
© 2013 McGraw-Hill Ryerson Limited.
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.
41
© 2013 McGraw-Hill Ryerson Limited.
End of Chapter
42
© 2013 McGraw-Hill Ryerson Limited.