05 accounting system and internal controls

Chapter 5

Learning Objectives

Power Notes

Accounting Systems and Internal Controls 1.Basic Accounting Systems2.Internal Control3.Manual Accounting Systems4.Adapting Manual Accounting Systems5.Computerized Accounting SystemsChapter 5

C5

C5 - #

Internal Control Framework, ProceduresSpecial Journals, LedgersRevenue Journal and LedgersCash Receipts Journal and LedgersPurchases Journal and LedgersCash Payments Journal and LedgersSlide # Power Note Topics3917233137

Note: To select a topic type the slide # and press Enter.

Power Notes

Chapter 5

Accounting Systems and Internal Controls

C5 - #

1.Control Environment

Control Environment

Internal Control Framework

C5 - #

1.Control Environment2.Risk Assessment

Risk AssessmentControl Environment


C5 - #

1.Control Environment2.Risk Assessment3.Control Procedures

Control ProceduresRisk AssessmentControl Environment


C5 - #

1.Control Environment2.Risk Assessment3.Control Procedures4.Monitoring

MonitoringControl ProceduresRisk AssessmentControl Environment


C5 - #

Internal Control Framework1.Control Environment2.Risk Assessment3.Control Procedures4.Monitoring5.Information and Communication

CommunicationMonitoringControl ProceduresRisk AssessmentControl Environment

C5 - #

Internal Control ProceduresCompetent PersonnelRotating DutiesAssigning ResponsibilitySeparating Responsibilities for Related OperationsSeparating Accounting and Asset CustodyProofs and Security Measures

C5 - #

Cash

Accts. Payable General Ledger Accts. Receivable

Supplies

General Ledger and Subsidiary Ledgers

C5 - #

Cash

Accts. Payable General Ledger

Accounts ReceivableSubsidiary Ledger

ABCDCustomer AccountsAccts. Receivable

Supplies

General Ledger and Subsidiary Ledgers

C5 - #

Cash

General Ledger and Subsidiary LedgersSupplies

Accts. Payable General Ledger

Accounts ReceivableSubsidiary Ledger

ABCDCustomer AccountsAccts. Receivable

Accounts PayableSubsidiary Ledger

ABCDCreditor Accounts

C5 - #

SELLING BUYING

Special Journals

C5 - #

Rendering of services on account SELLING Revenue Journal

recorded in BUYING

Special Journals

C5 - #

Rendering of services on account SELLING Revenue JournalCash Receipts JournalReceipt of cash from any source

recorded in

recorded in BUYING

Special Journals

C5 - #

Rendering of services on account SELLING Revenue JournalCash Receipts JournalPurchases JournalReceipt of cash from any sourcePurchase of items on account

recorded in

recorded in

recorded in BUYING

Special Journals

C5 - #

Special JournalsRendering of services on account SELLING Revenue Journal Cash Receipts Journal Purchases Journal Cash Payments JournalReceipt of cash from any sourcePurchase of items on accountPayment of cash for any purpose

recorded in

recorded in

recorded in

recorded in BUYING

C5 - #

3/2615MyMusicClub.com 2,2003/6616RapZone.com 1,7503/18617Web Cantina2,6503/27618MyMusicClub.com 3,000 Totals9,600

Revenue Journal

Invoice PostAccts. Rec. DebitDate No.Account Debited Ref.Fees Earned CreditPage 35

The Revenue Journal

All sales on account are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register.

C5 - #

Accounts Receivable Subsidiary Ledger

DateItemP.R. DebitCreditBalance

MyMusicClub.com Each debit is posted to the accounts receivable subsidiary ledger.Posting to the Subsidiary Ledger

Revenue Journal


3/2615 MyMusicClub.com 2,2003/6616 RapZone.com 1,7503/18617 Web Cantina2,6503/27618 MyMusicClub.com 3,000 Totals9,600

C5 - #



MyMusicClub.com3/2R35 2,2002,200Each debit is posted to the accounts receivable subsidiary ledger.Posting to the Subsidiary Ledger

Revenue Journal



C5 - #



MyMusicClub.com3/1R352,2002,2003/27R353,0005,200

Each debit is posted to the accounts receivable subsidiary ledger.Posting to the Subsidiary Ledger

Revenue Journal



C5 - #

General Ledger


Account: Accounts Receivable No. 123/1Bal 3,400

The total is posted to Accounts Receivable AND to Fees Earned.Posting to the General Ledger

Revenue Journal



C5 - #

General Ledger


Account: Accounts Receivable No. 12The total is posted to Accounts Receivable AND to Fees Earned.Posting to the General Ledger

Revenue Journal


3/1Bal 3,4003/31R359,60013,000

3/2615 MyMusicClub.com 2,2003/6616 RapZone.com 1,7503/18617 Web Cantina2,6503/27618 MyMusicClub.com 3,000 Totals9,600 (12) (41)

C5 - #

3/1 Rent Revenue400 4003/19 Web Cantina3,4003,4003/28 MyMusicClub.com2,2002,2003/30 RapZone.com 1,7501,750 Totals4007,3507,750

Cash Receipts Journal

OtherAccountsPostAccounts ReceivableCashDateAccount CreditedRef.CreditCreditDebitPage 14

The Cash Receipts Journal

All cash received from any source is recorded in this journal. The total Cash Debit column equals the total of the two credit columns.

C5 - #




Web Cantina Each Accounts Receivable credit is posted to the accounts receivable subsidiary ledger.



Posting to the Subsidiary Ledger3/1Bal 3,4003/27R352,6506,050

C5 - #



Web Cantina Each Accounts Receivable credit is posted to the accounts receivable subsidiary ledger.



Posting to the Subsidiary Ledger

3/1Bal 3,4003/18R352,6506,0503/19CR143,4002,650


C5 - #The three highlighted items are posted to the general ledger.



Posting to the General Ledger

3/1 Rent Revenue400 4003/19 Web Cantina3,4003,4003/28 MyMusicClub.com2,2002,2003/30 RapZone.com 1,7501,750 Totals4007,3507,750 ( )

General Ledger


Account: Accounts Receivable No. 123/1Bal 3,4003/31R359,60013,000

C5 - #The three highlighted items are posted to the general ledger.



Posting to the General Ledger

3/1 Rent Revenue42400 4003/19 Web Cantina3,4003,4003/28 MyMusicClub.com2,2002,2003/30 RapZone.com 1,7501,750 Totals4007,3507,750 ( )(12)(11)

General Ledger


Account: Accounts Receivable No. 12

3/1Bal 3,4003/31R359,60013,0003/31CR147,3505,650

C5 - #

General LedgerAccounts Receivable Control Account


Account:Accounts ReceivableNo. 12

3/1Bal. 3,4003/31R359,60013,0003/31CR147,3505,650

If the accounts receivable account in the general ledger only shows summary totals, where are the individual customer balances?

C5 - #

MyMusicClub.com


RapZone.com

3/6 R35 1,7501,7503/30CR141,7500DateItemP.R. DebitCreditBalance

Web CantinaDateItemP.R. DebitCreditBalance3/2R352,200 2,2003/27R353,000 5,2003/28CR142,2003,000

3/1Bal. 3,4003/18R352,6506,0503/19CR143,4002,650General LedgerAccounts Receivable Control Account



3/1Bal. 3,4003/31R359,60013,0003/31CR147,3505,650


C5 - #

MyMusicClub.com


RapZone.com

3/6 R35 1,7501,7503/30CR141,7500DateItemP.R. DebitCreditBalance

Web CantinaDateItemP.R. DebitCreditBalance3/2R352,200 2,2003/27R353,000 5,2003/28CR142,2003,000

3/1Bal. 3,4003/18R352,6506,0503/19CR143,4002,650General LedgerAccounts Receivable Control Account



3/1Bal. 3,4003/31R359,60013,0003/31CR147,3505,650


C5 - #

3/3Howard Supplies600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 2,8003/19Donnelly Supplies1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800

Purchases Journal

Accts.OtherPostPayableSuppliesAccountsPostDateAccount CreditedRef.CreditDebitDebitRef.AmountPage 11

The Purchases Journal

All purchases on account are recorded in this journal. The total credits to Accounts Payable equals the total of the two debit columns.

C5 - #

Purchases Journal


Accounts Payable Subsidiary Ledger


Howard SuppliesEach credit is posted to the accounts payable subsidiary ledger.Posting to the Subsidiary Ledger

3/3Howard Supplies600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 2,8003/19Donnelly Supplies1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800

C5 - #

Purchases Journal





3/3P11600600

3/3Howard Supplies 600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 2,8003/19Donnelly Supplies1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800

C5 - #

Purchases Journal





3/3P116006003/27P119601,560

3/3Howard Supplies600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 2,8003/19Donnelly Supp.1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800

C5 - #


Account:Accounts PayableNo. 21General Ledger3/1Bal. 1,230The highlighted items are posted to the general ledger.Posting to the General Ledger

Purchases Journal


3/3Howard Supplies600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 2,8003/19Donnelly Supp.1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800 DateItemP.R. DebitCreditBalance

C5 - #


Account:Accounts PayableNo. 21General Ledger

3/1Bal. 1,2303/31P116,2307,460The highlighted items are posted to the general ledger.Posting to the General Ledger

Purchases Journal


3/3Howard Supplies600600 3/7Donnelly Supplies420420 3/12Jewett Bus. Syst.2,800Office Equip. 182,8003/19Donnelly Supp.1,4501,450 3/27Howard Supplies 960960 Totals6,2303,4302,800 ( 21)(14)( )


C5 - #

3/2150Rent Expense1,600 1,6003/15151Grayco Supplies1,2301,2303/21152Jewett Bus. Syst.2,8002,8003/22153Donnelly Supp.4204203/30154Utilities Expense1,0501,0503/31155Howard Supplies600600 Totals2,6505,0507,700

Cash Payments Journal

OtherAccountsCk.PostAccounts PayableCashDateNo.Account DebitedRef.DebitDebitCreditPage 7

The Cash Payments Journal

All cash payments are recorded in this journal. Every check is listed in numerical order. This journal is often referred to as a check register.

C5 - #






Grayco Supplies3/1Bal. 1,230

Each Accounts Payable debit is posted to the accounts payable subsidiary ledger.Posting to the Subsidiary Ledger

C5 - #






Grayco Supplies

3/1Bal. 1,2303/15CP71,2300

Each Accounts Payable debit is posted to the accounts payable subsidiary ledger.Posting to the Subsidiary Ledger

C5 - #



3/2150Rent Expense1,600 1,6003/15151Grayco Supplies1,2301,2303/21152Jewett Bus. Syst.2,8002,8003/22153Donnelly Supp.4204203/30154Utilities Expense1,0501,0503/31155Howard Supplies600600 Totals2,6505,0507,700 ( )


Account:Accounts PayableNo. 21General Ledger3/1Bal. 1,2303/31P116,2307,460Posting to the General LedgerThe highlighted items are posted to the general ledger.

C5 - #



3/2150Rent Expense521,600 1,6003/15151Grayco Supplies1,2301,2303/21152Jewett Bus. Syst.2,8002,8003/22153Donnelly Supp.4204203/30154Utilities Expense541,0501,0503/31155Howard Supplies600600 Totals2,6505,0507,700 ( )(21)(11)


Account:Accounts PayableNo. 21General Ledger

3/1Bal. 1,2303/31P116,2307,4603/31CP75,0502,410

The highlighted items are posted to the general ledger.Posting to the General Ledger

C5 - #

Note: To see the topic slide, type 2 and press Enter.

This is the last slide in Chapter 5. Power Notes

Chapter 5

Accounting Systems and Internal Controls

C5 - #

05 accounting system and internal controls

Education