College Accounting
Chapter 7 – Accounting Information Systems
Name _______________________
Pages 353 - 372
AN EFFECTIVE ACCOUNTING INFORMATION SYSTEM
Objective 1: Describe an effective accounting information system
Provides:
1.
2.
3.
4.
CONTROL
Internal controls can safeguard ______________________________________________________.
Give two examples of controls:
____________________________________________________________________________________
____________________________________________________________________________________
____________________________________________________________________________________
COMPATIBILITY
In your own words, what does compatibility mean? _________________________________________________
___________________________________________________________________________________________
FLEXIBILITY
Why does your accounting system need to be flexible? ______________________________________________
___________________________________________________________________________________________
A GOOD COST/BENEFIT RELATIONSHIP
Why do you need this? __________________________________________
What is the goal of the system? ________________________________________________________________
COMPONENTS OF A COMPUTERIZED SYSTEM
Define & give examples of each:
Hardware –
Network—
Server—
Software—
HOW COMPUTERIZED AND MANUAL SYSTEMS WORK
Objective 2: Understand both computerized and manual accounting systems
Data processing includes three steps-- _______________________, _________________________ & _________________.
Give an example(s) of each:
Inputs—
Processing—
Outputs—
DESIGNING A SYSTEM: THE CHART OF ACCOUNTS
Look at the account numbers in Exhibit 7-3. Explain the logic of why Customer B’s account number is 115002.
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
___________________________________________________________________________________________________
PROCESSING TRANSACTIONS: MANUAL AND MENU-DRIVEN SYSTEMS
What 5 journals are used in a manual system? _____________________________________________________________
___________________________________________________________________________________________________
How are computerized system organized? ________________________________________________________________
Define online processing: ______________________________________________________________________________
Define batch processing:_______________________________________________________________________________
ENTERPRISE RESOURCE PLANNING (ERP) SYSTEMS
Give three examples of ERP _____________________________________________________________________
Advantages of ERP Systems:
1.
2.
3.
Objective 3: Understand how spreadsheets are used in accounting
INTEGRATE ACCOUNTING SOFTWARE: SPREADSHEETS
Advantage: link data by means of formulas and functions.
Advantage of using formulas in a spreadsheet ______________________________________________________
Examples:
a. Total assets = ______________________ + ______________________+ _______________________
b.
Net income = ________________________ - ________________________
c.
Current ratio = _________________________ / ___________________________
SPECIAL JOURNALS
Objective 4 – Use the sales journal, the cash receipts journal, and the accounts receivable ledger.
SPECIAL JOURNALS
SPECIAL JOURNALS IN A M ANUAL SYSTEM
What is a special journal? ____________________________________________________________________
__________________________________________________________________________________________
Fill in the chart with the five types of transactions, the related special journal, an the posting abbreviation
Transaction
Special Journal
Posting Abbreviation
What are the three main reasons we learned the manual system (even though most businesses have computerized
systems)?
1.
2.
3.
THE SALES JOURNAL
What is entered in the sales journal? _____________________________________________________________________
Where are other assets other than inventory recorded? ______________________________________________________
For each sales journal transaction, the account enters:
1.
2.
3.
4.
POSTING TO THE GENERAL LEDGER
When do you post from the sales journal to the general ledger? _____________________
POSTING TO THE ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER
What is a subsidiary ledger? __________________________________________________________________________
How are they arranged? ______________________________________________________________________
How often are the amounts in the sales journal posted to the subsidiary ledger? _________________________
What do you do after posting to the subsidiary ledger? ______________________________________________
Why? ______________________________________________________________________________________
JOURNAL REFERENCES IN THE LEDGERS
As you post to the ledgers, ___________________________________________________________ to show the source of the data.
See Exhibit 7-8
BALANCING THE LEDGERS
What does it mean to balance the Ledgers? ________________________________________________________________________________
________________________________________________________________________________________________________________________________
What is a control account? ____________________________________________________________
USING DOCUMENTS AS JOURNALS
Give two examples of using documents as journals:
1.
2.
THE CASH RECEIPTS JOURNAL
(study Exhibit 7-9 page 365)
What’s in the Debits Column? __________________________________________________________________________
What’s in the Credits Column? __________________________________________________________________________
Where is Cost of Goods Sold (DB) & Inventory (CR) entered? ________________________________ _________________
In the cash receipts journal, as in all journals, total debits should ___________________________________________.
POSTING TO THE GENERAL LEDGER
How often are column totals posted? __________________________________
What do you do after posting? _____________________________________________________________________
Where do the account numbers appear? ____________________________________
What column total is NOT posted? ________________________________________
POSTING TO THE SUBSIDIARY LEDGER
How often do you post amounts from the cash receipts journal to the accounts receivable ledger? ___________________
What are these postings? ___________________________
BALANCING THE LEDGERS
What must balance? _________________________________________________________________
Objective 5: Use the purchases journal, the cash payments journal, and the accounts payable ledger
THE PURCHASES JOURNAL
What does the purchases journal handle? __________________________________________________________________
The purchases journal has special columns for:
1.
2.
ACCOUNTS PAYABLE SUBSIDIARY LEDGER
Why would a business keep a subsidiary ledger? _____________________________________________________________
_____________________________________________________________________________________________________
How are the suppliers listed? _____________________________________________________
POSTING FROM THE PURCHASES JOURNAL
Individual accounts payable (in the accounts payable ledger) are posted _________________, and column totals and other
amounts to the general ledger are posted ____________________________.
THE CASH PAYMENTS JOURNAL
Cash Payments journal records what? _____________________________________________________. It is also called the
_____________________________________ and the _______________________________________________.
Label the columns in the following cash Payments Journal (do the shaded areas)
2008
Nov. 3
101
Rent Expense
541
1,200
1,200
Nov. 8
102
Supplies
161
61
61
ALL entries in this journal include a credit to ___________________.
POSTING FROM THE CASH P AYMENTS JOURNAL
Individual supplier amounts are posted _______________, and column totals are posted ____________________________.
BALANCING THE LEDGERS
What totals should agree? _______________________________________________________________________________
THE ROLE OF THE GENERAL JOURNAL
Give some examples of transactions that don’t fit in a special journal?
1.
2.
3.
4.
5.
THE CREDIT MEMO—RECORDING SALES RETURNS AND ALLOWANCES
What is a credit memo? __________________________________________________________________
Give an example (as shown on page 371) of how to record the sale return and receipt of defective merchandise. Make sure
to include the Post Ref.
General Journal
Date
Accounts
Post Ref.
Debits
Credits
Why is there a number and check mark next to Accounts Rec. – Clay Schmidt? _____________________________
_____________________________________________________________________________________________
THE DEBIT MEMO – RECORDING PURCHASE RETURNS AND ALLOWANCES
What is a debit memo? __________________________________________________________________
General Journal
Date
Accounts
Post Ref.
Debits
Credits
BALANCING THE LEDGERS
At the end of the period, after all postings, equality should exist as follows:
1.
General Journal: ________________________________________________________________________
2.
General ledger and Accounts Receivable subsidiary ledger:
3.
General ledger and Accounts Payable subsidiary ledger:
This process is called _________________________________________________. It maintains the accuracy of the
accounting records.
CHAPTER 7 REVIEW
What are the main components of an accounting system?
Where do you record:
a.
b.
c.
d.
e.
Sales on account? ______________________________________
Cash receipts? _________________________________________
Purchases on account? __________________________________
Cash payments? ________________________________________
All other transactions? ___________________________________
When do you post from the journals to the:
a.
b.
General ledger? _______________________________________
Subsidiary ledgers? ____________________________________
How to achieve control over:
a.
b.
Accounts receivable? _____________________________________________________________________
Accounts payable? _______________________________________________________________________