Accounting Systems
By Rachelle Agatha, CPA, MBA
Slides by Rachelle Agatha, CPA,
with excerpts from Warren, Reeve,
Duchac
After studying this chapter, you
should be able to:
• Define an accounting system and
describe its implementation.
• Journalize and post transactions in
a manual accounting system that
uses subsidiary ledgers and special
journals.
2
• Describe and give examples of
additional subsidiary ledgers and
modified special journals.
• Understand the overview process of
a computerized system.
• Describe the basic features of e-
commerce.
3
5-1
Objective 1
Define an accounting
system and describe
its implementation.
4
Accounting Systems Growth Process
Once a system has been
implemented, feedback, or
input from the users of the
information can be used to
analyze and improve the
system.
Internal Controls:
1. Are an integral part of any
organization's financial and
business policies and procedures.
2. Ensure that business information
is accurate, and ensure that
laws and regulations are being
followed
5-1
Processing methods are
the means by which the
system collects,
summarizes, and reports
accounting information.
8
5-1
Processing methods may
be either manual or
computerized.
9
5-2
Objective 2
Journalize and post
transactions in a manual
accounting system that uses
subsidiary ledgers and
special journals.
10
5-2
A large number of individual
accounts with a common
characteristic can be
grouped together in a
separate ledger called a
subsidiary ledger.
11
5-2
The primary ledger,
which contains all of
the balance sheet and
income statement
accounts, is called a
general ledger.
12
Each subsidiary ledger is represented in
the general ledger by a summarizing 5-2
account, called the control account.
 Cash is the Control Account for the
cash payments and cash receipts
 Accounts Receivable is the Control
Account for the Acct Rec Ledger
 Accounts Payable is the Control
Account for the Acct Payable
Ledger
13
5-2
The individual customers’
accounts are arranged in
alphabetical order in a
subsidiary ledger called the
accounts receivable
subsidiary ledger or
customers ledger.
14
5-2
The individual creditors’
accounts are arranged
in alphabetical order in
a subsidiary ledger
called the accounts
payable subsidiary
ledger, or creditors
ledger.
15
5-2
General Ledger and Subsidiary Ledgers
General Ledger
Cash
Accounts Receivable
Subsidiary Ledger
11
Customer Accounts
Accts. Rec. 12
A
C
14
Accounts Payable
Subsidiary Ledger
Accts. Pay. 21
Creditor Accounts
Supplies
A
16
B
B
C
D
D
17
TRANSACTION
SPECIAL JOURNAL
Provide Service on Acct
Revenue Journal
Receipt of Cash from any
source
Cash Receipt Journal
Purchase of items on
account
Purchase Journal
Payment of Cash for any
purpose
Cash Payment
Journal
(Disbursements
Journal)
The all-purpose two-column
journal, called the general
journal or simply the journal
can be used for entries that
do not fit into any of the
special journals.
Any other transaction
General Journal
5-4
Objective 4
Apply computerized
accounting to the
revenue and
collection cycle.
23
• Transactions are entered from a source
document (data entry)
•Accounting system processes transaction
•Data is posted to control account via batch
posting or real time
• Month is closed and accounts are updated with
all transactions – reports can be run
5-5
Objective 5
Describe the basic
features of ecommerce.
25
e-Commerce
Using the Internet to
perform business
transactions is termed
e-commerce.
26
5-5
E-commerce (electronic
commerce or EC) is the
buying and selling of goods
and services on the Internet,
Also known as E-Business
5-5
When transactions are
between a company
and a consumer, it is
termed B2C (business-toconsumer) e-commerce.
28
Three more advanced areas
where the Internet is being
used for business purposes
are:
 Supply chain
management (SCM)
 Consumer relationship
management (CRM)
 Product life-cycle
management (PLM)
29
5-5
Summary
 Accounting Systems
 Subsidiary Ledgers
 Special Journals
 E-Commerce
.