chapter 7-1. chapter 7-2 chapter 7 accounting information systems accounting principles, ninth...

Chapter 7-1

Chapter 7-2

Chapter 7

Accounting Information Systems

Accounting Principles, Ninth Edition

Chapter 7-3

1. Identify the basic concepts of an accounting information system.

2. Describe the nature and purpose of a subsidiary ledger.

3. Explain how companies use special journals in journalizing.

4. Indicate how companies post a multi-column journal.

Study ObjectivesStudy ObjectivesStudy ObjectivesStudy Objectives

Chapter 7-4

Computerized Computerized accounting accounting systemssystems

Manual Manual accounting accounting systemssystems

ExampleExample

AdvantagesAdvantages

Sales journalSales journal

Cash receipts Cash receipts journaljournal

Purchases journalPurchases journal

Cash payments Cash payments journaljournal

Effects of special Effects of special journals on journals on general journalgeneral journal

Basic Concepts Basic Concepts of Accounting of Accounting

Information Information SystemsSystems

Basic Concepts Basic Concepts of Accounting of Accounting

Information Information SystemsSystems

Subsidiary Subsidiary LedgersLedgers

Subsidiary Subsidiary LedgersLedgers Special JournalsSpecial JournalsSpecial JournalsSpecial Journals

Accounting Information SystemsAccounting Information SystemsAccounting Information SystemsAccounting Information Systems

Chapter 7-5

The accounting information system (AIS) collects and processes transaction data and communicates financial information to decision makers.

Includes:

All steps in the accounting cycle.

Documents that provide evidence of transactions.

Manual or computerized accounting system.

Basic Concepts of AISBasic Concepts of AISBasic Concepts of AISBasic Concepts of AIS

SO 1 Identify the basic concepts of an accounting information SO 1 Identify the basic concepts of an accounting information system.system.

Chapter 7-6



Cost Effectiveness - Benefits must outweigh the

costs.

Flexibility - The system should be sufficiently flexible

to meet the resulting changes in the demands

made upon it.

Useful Output

Illustration 7-1 Principles of an efficient and effective AIS.

Chapter 7-7

Software programs (functions include sales, purchases, receivables, payables, cash receipts and disbursements, and payroll).

Generate financial statements.

Advantages:

Typically enter data only once.

Many human errors are eliminated.

More timely information.

Computerized Accounting Systems



Chapter 7-8

Perform each step in the accounting cycle by hand.

Satisfactory in a company with a low volume of transactions.

Must understand manual accounting systems to understand computerized accounting systems.

Manual Accounting Systems



Chapter 7-9

Chapter 7-10

Used to keep track of individual balances.

Two common subsidiary ledgers are:

1. Accounts receivable (customers’)

2. Accounts payable (creditors’)

Subsidiary LedgersSubsidiary LedgersSubsidiary LedgersSubsidiary Ledgers

SO 2 Describe the nature and purpose of a subsidiary ledger.SO 2 Describe the nature and purpose of a subsidiary ledger.

Each general ledger control account balance must equal the composite balance of the individual accounts in the related subsidiary ledger.

See illustration 7-2 page 306See illustration 7-2 page 306

Chapter 7-11

Illustration 7-3


Relationship of general ledger and subsidiary ledgers

Chapter 7-12

1. Show in a single account transactions affecting one customer or one creditor.

2. Free the general ledger of excessive details.

3. Help locate errors in individual accounts.

4. Make possible a division of labor.


SO 2 Describe the nature and purpose of a subsidiary ledger.SO 2 Describe the nature and purpose of a subsidiary ledger.

Advantages of Subsidiary Ledgers

Chapter 7-13

Do it

See page 307 See page 307

Chapter 7-14

Special JournalsSpecial JournalsSpecial JournalsSpecial Journals

SO 3 Explain how companies use special journals in journalizing.SO 3 Explain how companies use special journals in journalizing.

Used to record similar types of transactions.

If a transaction cannot be recorded in a special journal, the company records it in the general

journal.

Illustration 7-5

Chapter 7-15

Each of the following is a subsidiary ledger except the:

a. accounts receivable ledger.

b. accounts payable ledger.

c. customer’s ledger.

d. general ledger.

Review QuestionReview Question


Chapter 7-16



Sales Journal

Illustration 7-6

Under a perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales.

Another entry at cost results in a debit to Cost of Goods Sold and a credit to Merchandise Inventory.

Chapter 7-17

Special JournalsSpecial JournalsSpecial JournalsSpecial Journals Illustration 7-7

Companies make daily postings from the sales journal to the individual

accounts receivable in the subsidiary ledger.

POSTING THE SALES JOURNAL

Proving the equality

See illustration 7-8 page 311

Chapter 7-18



Illustration 7-7

Posting to the general ledger is done monthly.

POSTING THE SALES JOURNAL

Chapter 7-19

One-line entry for each sales transaction saves time.

Only totals, rather than individual entries, are posted to the general ledger.

A division of labor results.

Advantages of Sales Journal

