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)


Learning ObjectivesLearning Objectives

3

A system designed to collect and process data within an organization for the purpose of providing users with information.


Management Information Management Information SystemsSystems

LO 14

Management Information System


Sales and Marketing

System

Finance System


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.


Accounting Information Systems Accounting Information Systems (AIS)(AIS)

LO 16

Components of an AIS


Inputs

Source Documents

Outputs

Reports/ Information to Internal/

External Users

Feedback Loop

LO 1

Accounts Payable

Accounts Receivable

PP & E Payroll


System

7

Most organizations use Special Journals to enhance efficiency of transaction processing.Types• Sales Journal• Cash Receipts Journal• Purchases Journal• Cash Disbursements Journal


Special JournalsSpecial Journals

LO 28

A listing of individual accounts with a common characteristic.Common Subledgers• Accounts Receivable• Accounts Payable• Merchandise Inventory


SubledgersSubledgers

LO 39

ACCOUNTS RECEIVABLE LEDGER

Adams Company

Date PR Debit Credit Balance

Jan. 1 S5 500 500ACCOUNTS RECEIVABLE LEDGER

Baine Company


Jan. 16 S5 1,000 1,000ACCOUNTS RECEIVABLE LEDGER

Cook Company


Jan. 25 S5 415 415

Accounts Receivable Subledger


A separate subledger account is used to show how much each

individual customer owes.LO 310

ACCOUNTS RECEIVABLE LEDGER

Adams Company


Jan. 1 S5 500 500ACCOUNTS RECEIVABLE LEDGER

Baine Company


Jan. 16 S5 1,000 1,000ACCOUNTS RECEIVABLE LEDGER

Cook Company


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.


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.


Mini-QuizMini-Quiz

13


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


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


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


Inventory2014


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


Feb. 2 S3 450 450

Sales Journal-Posting


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


Inventory2014


SALES JOURNAL

Daily, each transaction is posted

to the appropriate Accounts Receivable subledger account.

LO 4

18

ACCOUNTS RECEIVABLE SUBLEDGER

Jason Henry


2014

Feb. 2 S3 450 450

Sales Journal-Posting


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


Inventory2014


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


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


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


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


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


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


Page 3

DateAccount Debited

Invoice Number PR

Dr. A/R Cr. Sales


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


GENERAL LEDGER

Accounts Receivable No. 106


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



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


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




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


Purchases Journal


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



30

The Cash Disbursements

Journal is used to record all

payments of cash.

Outdoors Unlimited

Cash Disbursements JournalCash Disbursements Journal




Cash Disbursements Journal


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


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.


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.


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


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




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


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


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.


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