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Transcript of Accounting Information Systems PowerPoint Slides to accompany Fundamental Accounting Principles,...
Accounting Information
Systems
PowerPoint Slides to accompanyFundamental Accounting Principles, 14ce
Prepared byJoe Pidutti, Durham College
CHAPTER
7
1. Explain the relationship of the accounting information system (AIS) to the management information system (MIS) and identify the components of an AIS. (LO1)
2. Explain the goals and uses of special journals. (LO2)
3. Describe the use of controlling accounts and subledgers. (LO3)
© 2013 McGraw-Hill Ryerson Limited.
Learning ObjectivesLearning Objectives
2
4. Journalize and post transactions using special journals. (LO4)
5. Journalize and post transactions using special journals in a periodic inventory
system. (Appendix 7A) (LO5)
© 2013 McGraw-Hill Ryerson Limited.
Learning ObjectivesLearning Objectives
3
A system designed to collect and process data within an organization for the purpose of providing users with information.
© 2013 McGraw-Hill Ryerson Limited.
Management Information Management Information SystemsSystems
LO 14
Management Information System
© 2013 McGraw-Hill Ryerson Limited.
Sales and Marketing
System
Finance System
Accounting Information
System
Human Resources
System
Production System
Internal External
Community
Competitors
Customers
Government
Industry
Suppliers
LO 15
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.
© 2013 McGraw-Hill Ryerson Limited.
Accounting Information Systems Accounting Information Systems (AIS)(AIS)
LO 16
Components of an AIS
© 2013 McGraw-Hill Ryerson Limited.
Inputs
Source Documents
Outputs
Reports/ Information to Internal/
External Users
Feedback Loop
LO 1
Accounts Payable
Accounts Receivable
PP & E Payroll
Accounting Information
System
7
Most organizations use Special Journals to enhance efficiency of transaction processing.Types• Sales Journal• Cash Receipts Journal• Purchases Journal• Cash Disbursements Journal
© 2013 McGraw-Hill Ryerson Limited.
Special JournalsSpecial Journals
LO 28
A listing of individual accounts with a common characteristic.Common Subledgers• Accounts Receivable• Accounts Payable• Merchandise Inventory
© 2013 McGraw-Hill Ryerson Limited.
SubledgersSubledgers
LO 39
ACCOUNTS RECEIVABLE LEDGER
Adams Company
Date PR Debit Credit Balance
Jan. 1 S5 500 500ACCOUNTS RECEIVABLE LEDGER
Baine Company
Date PR Debit Credit Balance
Jan. 16 S5 1,000 1,000ACCOUNTS RECEIVABLE LEDGER
Cook Company
Date PR Debit Credit Balance
Jan. 25 S5 415 415
Accounts Receivable Subledger
© 2013 McGraw-Hill Ryerson Limited.
A separate subledger account is used to show how much each
individual customer owes.LO 310
ACCOUNTS RECEIVABLE LEDGER
Adams Company
Date PR Debit Credit Balance
Jan. 1 S5 500 500ACCOUNTS RECEIVABLE LEDGER
Baine Company
Date PR Debit Credit Balance
Jan. 16 S5 1,000 1,000ACCOUNTS RECEIVABLE LEDGER
Cook Company
Date PR Debit Credit Balance
Jan. 25 S5 415 415
After all items are posted,
the balance in the Accounts Receivable controlling
account must equal the sum
of the balances in
the subledger.
Accounts Receivable Subledger
LO 3© 2013 McGraw-Hill Ryerson Limited.11
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.
© 2013 McGraw-Hill Ryerson Limited.
Mini-QuizMini-Quiz
12
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.
© 2013 McGraw-Hill Ryerson Limited.
Mini-QuizMini-Quiz
13
© 2013 McGraw-Hill Ryerson Limited.
The sales journal is used to record sales of merchandise on credit.
Sales JournalSales Journal
LO 414
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.)
Sales Journal - Example
© 2013 McGraw-Hill Ryerson Limited. LO 415
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315
SALES JOURNAL
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.
LO 416
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315
SALES JOURNAL
LO 4
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.17
ACCOUNTS RECEIVABLE SUBLEDGER
Jason Henry
Date PR Debit Credit Balance
Feb. 2 S3 450 450
Sales Journal-Posting
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315
SALES JOURNAL
Daily, each transaction is posted
to the appropriate Accounts Receivable subledger account.
LO 4
18
ACCOUNTS RECEIVABLE SUBLEDGER
Jason Henry
Date PR Debit Credit Balance
2014
Feb. 2 S3 450 450
Sales Journal-Posting
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315
SALES JOURNAL
A in the PR column indicates
the transaction has been posted to the subledger account.
LO 419
Here is the Sales Journal after recording some additional sales.
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 3157 Albert Co. 308 500 355
13 Bam Moore 309 350 26015 Paul Roth 310 200 150
SALES JOURNAL
LO 420
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr. Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315 7 Albert Co. 308 500 355
13 Bam Moore 309 350 260 15 Paul Roth 310 200 150 22 Jason Henry 311 225 155 25 Frank Booth 312 175 95 28 Albert Co. 313 250 170
28 Totals 2,150 1,500
(106/413) (502/119)
SALES JOURNAL
On Feb. 28th , post the column total to Accounts
Receivable and Sales.
Feb. 28 S3 2,150 2,150
Feb . 28 S3 2,150 2,150
2014
2014
LO 4
21
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315 7 Albert Co. 308 500 355 13 Bam Moore 309 350 260 15 Paul Roth 310 200 150 22 Jason Henry 311 225 155 25 Frank Booth 312 175 95 28 Albert Co. 313 250 170
28 Totals 2,150 1,500
(106/413) (502/119)
SALES JOURNAL
Now post to the COGS and Merchandise Inventory
accounts …
Feb. 28 S3 1,500 15,600
Feb. 28 S3 1,500 14,7502014
201422
LO 4
Sales Journal
© 2013 McGraw-Hill Ryerson Limited.
Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
Dr. COGS Cr.Merchandise
Inventory2014
Feb. 2 Jason Henry 307 450 315 7 Albert Co. 308 500 355 13 Bam Moore 309 350 260 15 Paul Roth 310 200 150 22 Jason Henry 311 225 155 25 Frank Booth 312 175 95 28 Albert Co. 313 250 170
28 Totals 2,150 1,500
(106/413) (502/119)
SALES JOURNAL
… and include the posting references.
Feb. 28 S3 1,500 15,600
Feb. 28 S3 1,500 14,7502014
201423
LO 4
Schedule of Accounts ReceivableFebruary 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.
Testing the Ledger
© 2013 McGraw-Hill Ryerson Limited.
GENERAL LEDGER
Accounts Receivable No. 106
Date PR Debit Credit Balance
2014
Feb 28 S3 2,150 2,150
LO 424
If a company has few sales returns, they may record them in the General Journal.
But, if a company has lots of sales returns, they may use a Sales Returns and Allowances Journal.
Sales Returns and Allowances
© 2013 McGraw-Hill Ryerson Limited. LO 425
© 2013 McGraw-Hill Ryerson Limited.
The cash receipts journal is used to record all receipts of cash.
Cash Receipts JournalCash Receipts Journal
LO 426
Categories of Cash Receipts• Cash from cash sales• Cash from credit customers• Cash from other sources
Cash Receipts Journal - Example
© 2013 McGraw-Hill Ryerson Limited.
CASH RECEIPTS JOURNAL Page 2
Date Accounts Credited PR Explanation Cash Dr.
Sales Discount
Dr.
Accts. Rec. Cr. Sales Cr.
Other Accts.
Cr.
COGS Dr. Merchandise Inventory Cr
2014Feb. 7 Sales Cash sale 4,450 4,450 3,150
12 Jason Henry Invoice, Feb 2 441 9 450 14 Sales Cash sale 3,925 3,925 2,950 17 Albert Co. Invoice, Feb 7 490 10 500 20 Note payable Note to bank 750 750 21 Sales Cash sale 4,700 4,700 3,400 22 Interest revenue Bank account 250 250 23 Bam Moore Invoice, Feb 13 343 7 350 25 Paul Roth Invoice, Feb 17 196 4 200 28 Sales Cash sale 4,225 4,225 3,050
28 Total 19,770 30 1,500 17,300 1,000 12,550
(101) (415) (106) (413) (x) (502/119)
LO 427
Cash Receipts Journal
© 2013 McGraw-Hill Ryerson Limited.
CASH RECEIPTS JOURNAL Page 2
Date Accounts Credited PR Explanation Cash Dr.
Sales Discount
Dr.Accts. Rec.
Cr. Sales Cr.
Other Accts.
Cr.
COGS Dr. Merchandise Inventory Cr
2014Feb. 7 Sales Cash sale 4,450 4,450 3,150
12 Jason Henry Invoice, Feb 2 441 9 450 14 Sales Cash sale 3,925 3,925 2,950 17 Albert Co. Invoice, Feb 7 490 10 500
20 Note payable 245 Note to bank 750 750 21 Sales Cash sale 4,700 4,700 3,400
22 Interest revenue 409 Bank account 250 250 23 Bam Moore Invoice, Feb 13 343 7 350 25 Paul Roth Invoice, Feb 17 196 4 200 28 Sales Cash sale 4,225 4,225 3,050
28 Total 19,770 30 1,500 17,300 1,000 12,550
(101) (415) (106) (413) (x) (502/119)
LO 4
x Amount is not posted individually to an account.Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
28
The Purchases Journal is used to record all purchases on credit.
Purchases JournalPurchases Journal
© 2013 McGraw-Hill Ryerson Limited. LO 429
Purchases Journal
© 2013 McGraw-Hill Ryerson Limited.
PURCHASES JOURNAL Page 1
Date AccountInvoice
Date Terms PR
Accts. Payable
Cr.Merchandise Inventory Dr.
Office Supplies
Dr.
Other Accts.
Dr.2014
Feb 3 Horung Supply Co Feb. 2 n/30 350 275 755 Ace Mfg. Co 5 2/10,n/30 200 20013 Wynet & Co. 10 2/10,n/30 150 15020 Smite Co. 18 2/10,n/30 300 30025 Ace Mfg. Co 24 2/10,n/30 100 10028 Store supplies/ITT Co. 28 n/30 125/ 225 125 25 75
28 Totals 1,325 1,150 100 75
(201) (505) (124) (X)
LO 4
x Amount is not posted individually to an account.Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
30
The Cash Disbursements
Journal is used to record all
payments of cash.
Outdoors Unlimited
Cash Disbursements JournalCash Disbursements Journal
© 2013 McGraw-Hill Ryerson Limited. LO 431
x Amount is not posted individually to an account.Amount is posted individually to subledger.
Acct. No. Amount is posted to specified account.
Cash Disbursements Journal
© 2013 McGraw-Hill Ryerson Limited.
CASH DISBURSEMENTS JOURNAL Page 2
Date Ch. No. Payee Account Debited PRCash Cr.
Merch. Inventory
Cr.
Other Accounts
Dr.
Accounts Payable
Dr.2014
Feb. 3 105 L & N Railroad Merchandise Inv. 119 15 155 106 East Sales Co. Merchandise Inv. 119 25 2513 107 Ace Mfg. Co Ace Mfg. Co. 196 4 20020 108 Jerry Hale Salaries expense 622 250 25025 109 Wynet & Co. Wynet & Co. 147 3 15028 110 Smite Co. Smite Co. 294 6 300
28 Totals 927 13 290 650
(101) (119) (X) (201)
LO 432
Used for all transactions not recorded in a special journal.• Closing entries• Adjusting entries• Correcting entries• Other entries
© 2013 McGraw-Hill Ryerson Limited.
General JournalGeneral Journal
LO 433
Mini-QuizMini-Quiz
Purchased equipment on credit.
Sold merchandise for cash.
Paid for supplies that were purchased on account.
Sold merchandise on account.
© 2013 McGraw-Hill Ryerson Limited.
Give the name of the journal in which the following transactions should be recorded.
PJ
CRJ
CDJ
SJ
34
• Recording and posting is similar to a perpetual system.
• Some of the columns change in a periodic system.
© 2013 McGraw-Hill Ryerson Limited.
Special Journals Under a Special Journals Under a Periodic System-Appendix 7APeriodic System-Appendix 7A
LO 535
The column for Cost of Goods
Sold and Merchandise
Inventory is not needed with the
periodic system.
Sales Journal — Periodic System
© 2013 McGraw-Hill Ryerson Limited.
SALES JOURNAL Page 3
DateAccount Debited
Invoice Number PR
Dr. A/R Cr. Sales
2014Feb. 2 Jason Henry 307 450
7 Albert Co. 308 50013 Bam Moore 309 35015 Paul Roth 310 20022 Jason Henry 311 22525 Frank Booth 312 17528 Albert Co. 313 250
28 Total 2,150
(106/413)
LO 536
Cash Receipts Journal Periodic System
© 2013 McGraw-Hill Ryerson Limited.
CASH RECEIPTS JOURNAL Page 2
Date Accounts Credited PR Explanation Cash Dr.
Sales Discount
Dr.Accts. Rec.
Cr. Sales Cr.
Other Accts.
Cr.2014
Feb. 7 Sales Cash sale 4,450 4,450 12 Jason Henry Invoice, Feb 2 441 9 450 14 Sales Cash sale 3,925 3,925 17 Albert Co. Invoice, Feb 7 490 10 500
20 Note payable 245 Note to bank 750 750 21 Sales Cash sales 4,700 4,700
22 Interest revenue 409 Bank account 250 250 23 Bam Moore Invoice, Feb 13 343 7 350 25 Paul Roth Invoice, Feb 17 196 4 200 28 Sales Cash sale 4,225 4,225
28 Total 19,770 30 1,500 17,300 1,000
(101) (415) (106) (413) (x)
The column for Cost of Goods Sold and Merchandise Inventory are not needed with the
periodic system.
LO 537
Purchases Journal — Periodic System
© 2013 McGraw-Hill Ryerson Limited.
PURCHASES JOURNAL Page 1
Date AccountInvoice
Date Terms PR
Accts. Payable
Cr.Purchases
Dr.
Office Supplies
Dr.
Other Accts.
Dr.2014
Feb 3 Horung Supply Co Feb. 2 n/30 350 275 755 Ace Mfg. Co 5 2/10,n/30 200 20013 Wynet & Co. 10 2/10,n/30 150 15020 Smite Co. 18 2/10,n/30 300 30025 Ace Mfg. Co 24 2/10,n/30 100 10028 Store supplies/ITT Co. 28 n/30 125/ 225 125 25 75
28 Totals 1,325 1,150 100 75
(201) (505) (124) x
The Merchandise Inventory column in the perpetual system is replaced with Purchases column in the
periodic system.
LO 538
Cash Disbursements JournalPeriodic System
© 2013 McGraw-Hill Ryerson Limited.
CASH DISBURSEMENTS JOURNAL Page 2
Date Ch. No. Payee Account Debited PRCash Cr.
Purchase Discounts
Cr.
Other Accounts
Dr.
Accounts Payable
Dr.2014
Feb. 3 105 L & N Railroad Merchandise Inv. 119 15 155 106 East Sales Co. Merchandise Inv. 119 25 2513 107 Ace Mfg. Co Ace Mfg. Co. 196 4 20020 108 Jerry Hale Salaries expense 622 250 25025 109 Wynet & Co. Wynet & Co. 147 3 15028 110 Smite Co. Smite Co. 294 6 300
28 Totals 927 13 290 650
(101) (507) x (201)
The Merchandise Inventory column in the perpetual system is replaced with Purchases Discounts
column in the periodic system.
LO 539
What is the purpose of special journals?
Special journals help reduce the costs related to the time and effort of posting accounts.
© 2013 McGraw-Hill Ryerson Limited.
ReviewReview
40
ReviewReviewWhy 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.
© 2013 McGraw-Hill Ryerson Limited.41