MODULE IN IT2 ACCOUNTING INFORMATION SYSTEM Lorenzo B. Cabili University of Eastern Philippines 1 University of Eastern Philippines University Town, Catarman N. Samar Bachelor of Science in Accountancy Module: IT2 Accounting Information System Credit Units: 3 Instructor: Lorenzo B. Cabili (lorenzocabili@gmail.com.) Module Synopsis The module is aimed in developing student’s understanding on accounting information system, parts of information system, types of accounting information system, identify the functions of information system in a business organization. Developed knowledge in computerized accounting on service enterprises and merchandising firms. Module Teaching Objectives The teaching objectives of the modules are: 1. To identify the parts of an information system. 2. To understand the objectives of an effective accounting information 3. To understand the types of accounting information 4. To able to set up a simple computerized accounting system for service enterprise using MS Excel. 5. To able to set up a simple computerized accounting system for merchandising firm using MS excel Module learning outcomes Upon successful completion of the modules, the students will be able to: 1. Explain what is information system, accounting information system and types of accounting information system. 2. Prepare computerized accounting system for service enterprise by: a. Making columnar journals b. Making the ledgers c. Linking journals to ledgers d. Making trial balance and linking to ending ledger balances to trial balance e. Making balance sheet format and linking the trial balance f. Making income statement format linking ledger balance 3. Prepare computerized accounting system for merchandising firms by: a. Making workbook for special journals. b. Linking special journals to trial balance c. Completing the balance sheet, income statement with link formulas d. Posting beginning balances and recording the business transaction e. Month or year-end adjustment 2 Module 1 Introduction to Accounting information System What is Information System? An information system is a collection of people, procedures, software hardware and data which works together to provide information essential to running an organization. Example are corporations which uses information systems to process financial accounts, to manage their human resources, and to reach their potential customers with online promotions. Many major companies are built entirely around information systems. These include eBay, a largely auction marketplace; Amazon, an expanding electronic mall and provider of cloud computing services; Alibaba, a business-to-business e-marketplace; and Google, a search engine company that derives most of its revenue from keyword advertising on Internet searches. Governments deploy information systems to provide services cost-effectively to citizens. Digital goods—such as electronic books, video products, and software—and online services, such as gaming and social networking, are delivered with information systems. Individuals rely on information systems, generally Internet-based, for conducting much of their personal lives: for socializing, study, shopping, banking, and entertainment. (source: Britanica) What are parts of an Information System? 1. People – this are primarily the end users working to increase their productivity. It usually uses hardware and software to solve information-related or decision making problems. 2. Procedures – This are manuals and guidelines that instruct end users on how to use the software and hardware. 3. Software – this are programs that tell the computer on how to process data. Kinds of Software: a. System Software – this are background software that helps computer mange it’s internal resources. Example are Microsoft Windows, GNU/linux , macOS and Android. b. Application Software – it is a computer program designed to help people perform an activity. Application software maybe basic or advanced. Basic application software includes: Browsers – navigate, explore, find information on the Internet Word processor – prepare written documents Spreadsheet – analyze and summarize numerical data Database management system – organize and manage data and information Presentation graphics – communicate a message or persuade other people Advanced application software includes: 3 Multimedia – integrate video, music, voice, and graphics to create interactive presentations. Web publishers – create interactive multi-media Web pages Graphics programs – create professional publications, draw, edit and modify images Virtual reality –create realistic three dimensional virtual or simulated environments Artificial intelligence – simulated human thought processes and actions Project managers – plan projects, schedule, people, and control resources 4. Hardware- this consist of input devices, the system units, secondary storage, output devices, and communication devices. Input devices includes keyboard and mouse System unit includes CPU or Central Processing Unit. This manipulates data to produce information Memory or Primary Storage- holds data, program instructions and processed data Secondary Storage – store data and programs example are flash drive, hard disk Optical disk Output devices includes monitor which display results and printer which prints images on paper Communication devices –these send and receive data and programs from computer to another. A device that connects a microcomputer to a telephone is modem. 5. Data – is a raw material for data processing. These consist of numbers, letters and symbols And relates to facts, events and transactions. Data describes something and is typically stored electronically in a file. A file is a collection of characters organized as a single unit. Common types of files are: Documents – Letters, research papers, and memoranda. Worksheet – budget analyses, sales projections Database- structured and organized data. ACCOUNTING INFORMATION SYSTEM It is an information system which will generate reliable financial information needed by the users or decision makers in a timely manner. The design of the system will depend the business entity’s size and nature of operations, volume of transaction data, organizational structure and government regulations. Accounting information system is the combination of personnel, records and procedures that a business uses to meet its need for financial information. Usually business have an accounting manual that specifies policies and procedures to be followed in accumulating information within the accounting information system. The manual details what events are to be recorded in the accounts, and when and how the information is to be classified and accumulated. Objectives of accounting information system: 1. To process the information efficiently at the least cost (cost benefit principle 2. To protect entity’s assets, to ensure that data are reliable, and to minimize wastes and possibility of theft or fraud (control principle) 3. To be in harmony with the entity’s organizational and human factors (compatibility principle) 4. To be able to accommodate growth in the volume of transactions and for organizational changes (flexibility principle) 4 Accounting information system PREPARE A COLUMNAR JOURNAL BY FOLLOWING THE ABOVE INSTRUCTIONS 1. Open your Ms Excel, 2. Rename sheet 1 to Columnar journal then change the column width of column E up to column T to 13. 3. Format column cells to Accounting then symbol none and decimal places 2 4. Change the column width of column A to 4, column B to 3, column C to 30 and column D to 13. 5. Center Row 1 to 5 6. Underline Row 5 (click no. 5 row and click U Underline button on the format bar.) 7. Type the following labels on their corresponding cells: C1 N. BATYO COMPUTER REPAIR SHOP C2 COLUMNAR JOURNAL A5 DATE C5 EXPLANATION D5 REFERENCE Merges E4 and F4 (click E4 drag to F4 click Format select cells then click Alignment select Text ,check wrap text, check merges cell and click Ok.) type C A S H E5 DEBIT F5 CREDIT G4 Accounts G5 DEBIT H4 Receivable H5 CREDIT I4 Computer Parts I5 DEBIT J4 Equipment J5 DEBIT K4 Accounts K5 DEBIT L4 Payable L5 CREDIT M4 Bank Loan M5 CREDIT N3 N. BATYO COMPUTER N4 Capital REPAIR N5 CREDIT SHOP O3 N. BATYO COMPUTER O4 Drawing REPAIR O5 DEBIT SHOP P3 Repairs P4 Income P5 CREDIT Q3 Parts Q4 Expense Q5 DEBIT R3 Rent R4 Expense R5 DEBIT S3 Salary S4 Expense S5 DEBIT T3 Supllies T4 Expense T5 DEBIT 8. Create a formula on E22 ( Click auto sum on the tool bar, click E22, clickto E6 and drag to E21 press enter) 9. Copy the formula on E22 up to T22.(Click E22 drag to T22 ) 10. Create a border on E22 up to T22. ( Click Borders button v on the format bar and click thick box border) 11. Save as Activity 1 columnar journal on your folder file. N. BATYO COMPUTER REPAIR SHOP COLUMNAR JOURNAL CASH DATE EXPLANATION REFERENCE DEBIT - CREDIT Accounts DEBIT Recivable CREDIT - - - Computer parts DEBIT - Equipment DEBIT Accounts DEBIT Payable CREDIT Bank loan CREDIT N. BATYO Capital CREDIT N. BATYO Drawing DEBIT Repairs Income CREDIT Parts Expense DEBIT Rent Expense DEBIT Salary Expense DEBIT Supplies Expense DEBIT - - - - - - - - - - - 5 6
