© 2016 Pearson Education, Inc.

Appendix CAccounting Information

Systems

Learning Objectives

1. Describe an effective accounting information system

2. Journalize and post sales and cash receipts in a manual accounting information system using special journals and subsidiary ledgers

C-2© 2016 Pearson Education, Inc.

Learning Objectives

3. Journalize and post purchases, cash payments, and other transactions in a manual accounting information system using special journals and subsidiary ledgers

C-3© 2016 Pearson Education, Inc.

Learning Objectives

4. Describe how transactions are recorded in a computerized accounting information system

C-4© 2016 Pearson Education, Inc.

Learning Objective 1

Describe an effective accounting information system

C-5© 2016 Pearson Education, Inc.

What Is an Accounting Information System?

• An accounting information system (AIS) provides information that is useful for decision makers.

• An AIS:– Collects– Records– Stores– Processes accounting data

C-6© 2016 Pearson Education, Inc.

What Is an Accounting Information System?

C-7© 2016 Pearson Education, Inc.

Effective Accounting Information Systems

• An effective accounting information system provides: – Control– Compatibility– Flexibility– Relevance– Positive cost/benefit relationship

C-8© 2016 Pearson Education, Inc.

Components of an Accounting Information System

• An accounting information system has three basic components:– Source documents and input devices

• Purchase invoices, bank checks, sales invoices

– Processing and storage• A server allows employees to access information from

anywhere in the world.

– Outputs• Reports, such as the financial statements

C-9© 2016 Pearson Education, Inc.

Learning Objective 2

Journalize and post sales and cash receipts in a manual accounting information system using special journals and subsidiary ledgers

C-10© 2016 Pearson Education, Inc.

How Are Sales and Cash Receipts Recorded in a Manual Accounting Information System?

• Manual accounting information systems are covered in this course because:– The accounting is the same regardless of the

system.– Few small businesses have computerized all of

their accounting.– Learning a manual system helps you master

accounting.

C-11© 2016 Pearson Education, Inc.

Special Journals

• A special journal is an accounting journal designed to record one specific type of transaction.

• The four special journals are:– Sales journal– Cash receipts journal– Purchases journal– Cash payments journal

C-12© 2016 Pearson Education, Inc.

Special Journals

C-13© 2016 Pearson Education, Inc.

Subsidiary Ledgers

• Accounting information systems use subsidiary ledgers.

• There are two common subsidiary ledgers:• Accounts receivable subsidiary ledger• Accounts payable subsidiary ledger

• The sum of the balances in a group of related accounts in a subsidiary ledger is called a control account.

C-14© 2016 Pearson Education, Inc.

Accounts Receivable Subsidiary Ledger

• The accounts receivable subsidiary ledger includes a receivable account for each customer.

C-15© 2016 Pearson Education, Inc.

Accounts Payable Subsidiary Ledger

• The accounts payable subsidiary ledger lists:– Vendors in alphabetical order– Amounts paid– Amounts owed

• The total of the individual balances in the subsidiary ledger equal the Accounts Payable (control account) balance in the general ledger.

C-16© 2016 Pearson Education, Inc.

The Sales Journal

• Most merchandisers sell inventory on account.

• The credit sales are entered in a sales journal.

• The sale of merchandise inventory for cash is not recorded in the sales journal.

C-17© 2016 Pearson Education, Inc.

The Sales Journal

C-18© 2016 Pearson Education, Inc.

C-19© 2016 Pearson Education, Inc.

The Sales Journal

The Sales Journal

• Instead of the sale transaction being recorded in the general journal, it is recorded in the sales journal.

• Note all items appear on a single line.

C-20© 2016 Pearson Education, Inc.

The Cash Receipts Journal

• The cash receipts journal records the collection of cash receipts.

• Every transaction in the cash receipts journal is a cash receipt; no payments are recorded.

C-21© 2016 Pearson Education, Inc.

The Cash Receipts Journal

C-22© 2016 Pearson Education, Inc.

The Cash Receipts Journal

C-23© 2016 Pearson Education, Inc.

Learning Objective 3

Journalize and post purchases, cash payments, and other transactions in a manual accounting information system using special journals and subsidiary ledgers

C-24© 2016 Pearson Education, Inc.

How Are Purchases, Cash Payments, and Other Transactions Recorded in a Manual

Accounting Information System?

• A merchandising business purchases merchandise inventory and other items on account.

• The purchases journal handles these transactions.

• Cash purchases are not recorded in the purchases journal; they are recorded in the cash payments journal.

C-25© 2016 Pearson Education, Inc.

The Purchases Journal

C-26© 2016 Pearson Education, Inc.

The Purchases

Journal

C-27© 2016 Pearson Education, Inc.

The Cash Payments Journal

• Businesses make most payments by check.

• All cash and check payments are recorded in the cash payments journal.

• This special journal is also called the check register and the cash disbursements journal.

C-28© 2016 Pearson Education, Inc.

The Cash Payments Journal

C-29© 2016 Pearson Education, Inc.

The Cash Payments

Journal

C-30© 2016 Pearson Education, Inc.

The General Journal

• Not all transactions can be recorded in a special journal.

• The general journal is used to record all other transactions, such as:– Adjusting entries for depreciation– Expiration of prepaid insurance– Accrual of salaries payable– Adjustments for sales returns and allowances

and purchase returns and allowances

C-31© 2016 Pearson Education, Inc.

C-32© 2016 Pearson Education, Inc.

The General Journal

Learning Objective 4

Describe how transactions are recorded in a computerized accounting information system

C-33© 2016 Pearson Education, Inc.

How Are Transactions Recorded in a Computer Accounting Information Systems?

• A computerized accounting information system has two basic components: – Hardware is the electronic equipment, such as

computers, monitors, printers, and the network that connects them.

– Software is the set of programs that drives the computer.

C-34© 2016 Pearson Education, Inc.

Entry-Level Software

• Two popular computerized accounting information systems for small businesses are:– QuickBooks– Sage 50 Accounting

• These programs allow businesses to:

C-35

Enter sales transactions

Record expenses

Produce reports

Organize finances

© 2016 Pearson Education, Inc.

Enterprise Resource Planning (ERP) Systems

• Larger companies often use an enterprise resource planning (ERP) system to manage their data.

• ERP systems are compatible with cloud computing.

C-36

Advantages•Reduce operating costs.•Help companies adjust to change.•Integrate separate software systems.

Disadvantages•Major installations are expensive.•Implementation requires large commitment of time and people.

© 2016 Pearson Education, Inc.

QuickBooks

• On June 23, Smart Touch Learning performed $3,000 of services for Richard Michura on account.

• Smart Touch Learning needs to create an invoice for Richard. • In a computerized accounting system, the

business does not have to record the transaction in debit and credit format.

• The software automatically posts to the appropriate general ledger accounts.

C-37© 2016 Pearson Education, Inc.

QuickBooks

C-38© 2016 Pearson Education, Inc.

QuickBooks

• The Vendors tab of QuickBooks is used to record bills received.

• On June 25, Smart Touch Learning received a $580 bill for utilities.

• The company records the bill in QuickBooks, and all items will post automatically to the appropriate general ledger accounts.

C-39© 2016 Pearson Education, Inc.

QuickBooks

C-40© 2016 Pearson Education, Inc.

QuickBooks

C-41© 2016 Pearson Education, Inc.

C-42© 2016 Pearson Education, Inc.