student version

Student VersionStudent Version

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Accounting Accounting

SystemsSystems

Chapter 5Chapter 5Chapter 5Chapter 5


Learning Learning Objective

ObjectiveDefine and describe an

Define and describe an accounting system.

accounting system.

11

_________ ___________Systems_________ ___________Systems

o An accounting ____________is the methods An accounting ____________is the methods and procedures for __________, __________, and procedures for __________, __________, __________, and __________a business’s __________, and __________a business’s financial and operating information.financial and operating information.

BASIC ACCOUNTING SYSTEMSBASIC ACCOUNTING SYSTEMS

As a business grows As a business grows and changes, and changes, accounting systems accounting systems also change in the also change in the following three-step following three-step process.process.

1.1. ________________________________________________ ________________ ________________________________

2.2. ________________________________________________________________________________ ________________

3.3. ________________________________________________________________________________________________

BASIC BASIC ACCOUNTING ACCOUNTING

SYSTEMSSYSTEMS

Basic Accounting SystemsBasic Accounting Systems

o ___________ ___________ are the policies and ___________ ___________ are the policies and procedures that ___________ assets from procedures that ___________ assets from ___________ , ensure that business ___________ , ensure that business information is ___________ , and ensure information is ___________ , and ensure that laws and ___________ are being that laws and ___________ are being ___________ .___________ .

___________ Methods___________ Methods

o ___________ ___________ are the means by ___________ ___________ are the means by which the accounting system collects, which the accounting system collects, summarizes, and reports accounting summarizes, and reports accounting information. These methods may be either information. These methods may be either ___________ or ___________ .___________ or ___________ .



ObjectiveJournalize and post transactions

Journalize and post transactions

in a manual accounting system

in a manual accounting system

that uses subsidiary ledgers and

that uses subsidiary ledgers and special journals.

special journals.

22

Manual Accounting SystemsManual Accounting Systems

o Understanding a manual accounting Understanding a manual accounting system is useful in identifying system is useful in identifying relationships between accounting relationships between accounting ___________ and ___________ .___________ and ___________ .

___________ ___________ ___________ ___________

o A large number of ___________ accounts A large number of ___________ accounts with a ___________ characteristic can be with a ___________ characteristic can be grouped together in a separate ___________ grouped together in a separate ___________ called a ___________ ledger.called a ___________ ledger.

Subsidiary LedgersSubsidiary Ledgers

o The primary ___________ , which contains The primary ___________ , which contains all of the balance sheet and ___________ all of the balance sheet and ___________ ___________ accounts, is called a ___________ accounts, is called a ___________ ___________ .___________ ___________ .

___________ Ledgers___________ Ledgers

o Each ___________ ledger is represented in Each ___________ ledger is represented in the ___________ ledger by a summarizing the ___________ ledger by a summarizing account,account, called a ___________ account.called a ___________ account.


o The individual customer accounts are The individual customer accounts are arranged in ___________ order in a arranged in ___________ order in a subsidiary ledger called the ___________ subsidiary ledger called the ___________ ___________ ___________ ___________ ,___________ ___________ ___________ , oror ___________ ledger.___________ ledger.


o The individual ___________ accounts are The individual ___________ accounts are arranged in alphabetical order in a arranged in alphabetical order in a subsidiary ledger called the ___________ subsidiary ledger called the ___________ ___________ ___________ ___________ ,___________ ___________ ___________ , or or ___________ ledger.___________ ledger.

___________ Journal___________ Journal

o One method of processing transactions One method of processing transactions more efficiently in a manual system is to more efficiently in a manual system is to use ___________ ___________ . ___________ use ___________ ___________ . ___________ ___________ are designed to be used for ___________ are designed to be used for recording a single kind of transaction that recording a single kind of transaction that ___________ ___________ .___________ ___________ .

SPECIAL SPECIAL JOURNALSJOURNALS

BUYING

SELLING

Special JournalsSpecial Journals

o The ___________ two-column journal, called The ___________ two-column journal, called the ___________ ___________ or simply the the ___________ ___________ or simply the ___________ ___________ ,, can be used for entries that can be used for entries that do not fit into any of the ___________ do not fit into any of the ___________ journals.journals.


o The ___________ journal is used for The ___________ journal is used for recording fees earned on ___________ . recording fees earned on ___________ .


o Cash fees earned would be recorded in the Cash fees earned would be recorded in the ___________ ___________ ___________ .___________ ___________ ___________ .


o ___________ made on account (on ___________ made on account (on __________ ) are recorded in the purchases __________ ) are recorded in the purchases ___________ .___________ .


o All cash payments are recorded in the All cash payments are recorded in the ___________ ___________ ___________ .___________ ___________ ___________ .

EXHIBIT 3 EXHIBIT 3 (IN STEPS)(IN STEPS)

(continued)

Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit

Page 35

1

2

3

4

5

6

1

2

3

4

5

6

2014

Mar. 2 615 Accessories By Claire 2 2 0 0 00

6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00

27 618 Accessories by Claire 3 0 0 0 00


1

2

3

4

5

6

1

2

3

4

5

6

6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00


(continued)

Date Item P.R. Debit Credit Balance

Mar. 2 R35 2,200 2,200

2014

Accounts Receivable Subsidiary Ledger

Accessories By Claire

Revenue Journal Page 35

2014


Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit



Page 35

1

2

3

4

5

6

1

2

3

4

5

6


(continued)

2014

6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00



Mar. 2 R35 2,200 2,200

2014


Accessories By Claire



Page 35

1

2

3

4

5

6

1

2

3

4

5

6

2014


(continued)

6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00


The same procedure would be used to post the other transactions to the individual accounts in the accounts receivable subsidiary ledger.


Revenue Journal Page 35

1

2

3

4

5

6

1

2

3

4

5

6

2014


(continued)

6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00


Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit

Next, the amount column would be totaled.

9 6 0 0 0031


ACCOUNT Accounts Receivable Account No. 12

Balance

Dr. Cr.Date Dr. Cr.Item

Post. Ref.

2014Mar. 1 Balance 3 400 00

31 9 600 00 13 000 00 R35

The debit total is posted from the revenue journal to Accounts Receivable in the general ledger.

Revenue Journal, page 35

(continued)



Page 35

1

2

3

4

5

6

1

2

3

4

5

6 (12)

Indicates a debit posting of $9,600 to Accounts Receivable (General Ledger Account 12)

2014


6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00


31 9 6 0 0 00

(continued)


ACCOUNT Fees Earned Account No. 41

Balance

Date Dr. Cr.ItemPost.

Ref.

9 600 00 R35

The credit total is posted from the revenue journal to Fees Earned in the general ledger.

9 600 00

Dr. Cr.

(continued)

Revenue Journal, page 35

Mar. 312014


Indicates a credit posting of $9,600 to Fees Earned (General Ledger Account 41)


Page 35

1

2

3

4

5

6

1

2

3

4

5

6 (12)

2014


6 616 RapZone 1 7 5 0 00

18 617 Web Cantina 2 6 5 0 00


31 9 6 0 0 00

(41)

___________ ___________ Journal___________ ___________ Journal

o All transactions that involve the receipt of All transactions that involve the receipt of cash are recorded in a _____ _____ _____ . cash are recorded in a _____ _____ _____ . Every entry recorded in the _____ _____ Every entry recorded in the _____ _____ journal will involve a _____ to the journal will involve a _____ to the “__________” column. “__________” column.


Mar. 1 Rent Revenue 400 400

CASH RECEIPTS JOURNAL

Other Accounts Post Accounts Receivable Cash

Date Account Credited Ref. Cr. Cr. Dr.

Page 14

2014

19 Web Cantina 3,400 3,400

28 Accessories By Claire 2,200 2,200

30 RapZone 1,750 1,750

Date Item P.R. Debit Credit Cr. Bal.

ACCOUNT Rent Revenue Acct. No. 42

GENERAL LEDGER

42

CR14Mar. 12014

400

(continued)

400



Web Cantina

Mar. 1 Bal. 3,400

18 R35 2,650 6,050

2014

3,400 2,650

19





Page 14

2014

19 Web Cantina 3,400 3,400


30 RapZone 1,750 1,750


CR14

(continued)

42

Cash Receipts JournalCash Receipts Journal

o After all journalizing and posting to After all journalizing and posting to individual accounts for the month is individual accounts for the month is complete, the columns are totaled.complete, the columns are totaled.






Page 14

2014

19 Web Cantina 3,400 3,400


30 RapZone 1,750 1,750

42

400 7,350 7,750( ) ( ) ( )

A check mark indicates that items in this column are posted individually.

12 11

(continued)

31

_________ _________ Account_________ _________ Account

o The total of the accounts in the accounts The total of the accounts in the accounts receivable _________ ledger should receivable _________ ledger should _________ the balance in the _________ _________ the balance in the _________ _________ _________ _________ account._________ _________ _________ account.

_________ Journal_________ Journal

o The _________ _________ is designed for The _________ _________ is designed for recording all purchases recording all purchases on on _________ ._________ .


Accts. OtherPost Payable Supplies Accounts Post

Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount

PURCHASES JOURNAL Page 11

2014

Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420

12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960

(continued)



7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960

Note that the March 12 purchase of office equipment for $2,800 is recorded as a debit in the “Other Accounts Dr.” column. Also note that the account title is written in for proper posting.

(continued)



PURCHASES JOURNAL

2014

Mar. 3 Howard Supplies 600 600






PURCHASES JOURNAL

2014


Date Item P.R. Dr. Cr. Balance

2014

P11

(continued)

Accounts Payable Subsidiary Ledger

Howard Supplies

600Mar. 3 600






PURCHASES JOURNAL

2014


(continued)

The other entries to the accounts payable subsidiary ledger are recorded using the same procedure.



2012

Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420

12 Jewett Bus. Sys. 2,800 Off. Equip. 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 960

This posting reference indicates that Office Equipment (Account 18) is debited in the general ledger for $2,800.


Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount2014

18

Purchases JournalPurchases Journal

o At the end of March, all columns are At the end of March, all columns are totaled and the equality of debits and totaled and the equality of debits and credits is verified. Then the total amounts credits is verified. Then the total amounts in the “Accounts Payable Cr.” and in the “Accounts Payable Cr.” and “Supplies Dr.” columns are posted. “Supplies Dr.” columns are posted. Because Office Equipment was posted Because Office Equipment was posted earlier, the $2,800 total is not posted.earlier, the $2,800 total is not posted.


7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 18 2,80019 Donnelly Supplies 1,450 1,45027 Howard Supplies 960 96031 6,230 3,430 2,800

( ) ( ) ( )




2014


21

ACCOUNT Accounts Payable No. 21

GENERAL LEDGER


Mar. 1 Bal 1,2306,230 7,46031 P11

2014

Supplies would be debited for $3,430

and 14 written in the parentheses.

_________ Payments Journal_________ Payments Journal

o All transactions involving a credit to All transactions involving a credit to _________ are recorded in the _________ _________ are recorded in the _________ _________ _________ . _________ _________ .


CASH PAYMENTS JOURNAL

Other AccountsCk. Post Accounts Payable Cash

Date No. Account Debited Ref. Dr. Dr. Cr

PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

On March 2, 2014, issued Check 150 for

rent of $1,600.

(continued)

Cash Payments JournalCash Payments Journal

o The amounts listed in the “Other Accounts The amounts listed in the “Other Accounts Dr.” column are posted on a regular basis. Dr.” column are posted on a regular basis. The $1,600 for Rent Expense is posted to The $1,600 for Rent Expense is posted to Account No. 52. Account No. 52.





PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

General Ledger

Account Rent Expense

1,600 1,600


Account No. 52

52

(continued)

2014Mar. 2 CP7


15 151 Grayco Supplies 1,230 1,230

CASH PAYMENTS JOURNAL PAGE 7



2014Mar. 2 150 Rent Expense 1,600 1,600

On March 15, issued Check 151 to Grayco Supplies for $1,230.

52

(continued)


o Let’s post to the accounts payable Let’s post to the accounts payable subsidiary ledger at this time to keep the subsidiary ledger at this time to keep the creditors’ accounts current.creditors’ accounts current.





PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

15 151 Grayco Supplies 1,230 1,23052

Accounts Payable Subsidiary Ledger

Grayco Supplies

Mar. 1 Bal. 1,230


1,230 --- 15 CP7

2014

(continued)


o Now, let’s journalize the remainder of Now, let’s journalize the remainder of March’s cash disbursements. Following March’s cash disbursements. Following that, let’s post to the individual creditors’ that, let’s post to the individual creditors’ accounts.accounts.





PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

15 151 Grayco Supplies 1,230 1,23021 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600

52

(continued)


PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

15 151 Grayco Supplies 1,230 1,23052

54

21 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600

(continued)





o The journal is ruled, summed, and verified The journal is ruled, summed, and verified for the _________ of the _________ and the for the _________ of the _________ and the “_________ ” column.“_________ ” column.




PAGE 7

2008Mar. 2 150 Rent Expense 1,600 1,600





PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600

15 151 Grayco Supplies 1,230 1,230

31 2,650 5,050 7,700

52

54

21 152 Jewett Business Sys. 2,800 2,80022 153 Donnelly Supplies 420 42030 154 Utilities Expense 1,050 1,05031 155 Howard Supplies 600 600

(continued)

CASH CASH PAYMENTS PAYMENTS JOURNALJOURNAL

CASH CASH PAYMENTS PAYMENTS JOURNALJOURNAL




PAGE 7

2008Mar. 2 150 Rent Expense 1,600 1,600





PAGE 7

2014Mar. 2 150 Rent Expense 1,600 1,600


31 2,650 5,050 7,700

52

54

(21) (11)( )

The totals for “Accounts Payable Dr.” and “Cash Cr.” are posted.

(continued)

_________ _________ Account_________ _________ Account

o After all posting has been completed, the After all posting has been completed, the balances in the _______ payable _______ balances in the _______ payable _______ ledger should _______ the balance of the ledger should _______ the balance of the _______ _______ _______ account in the _______ _______ _______ account in the general ledger .general ledger .



ObjectiveDescribe and illustrate the use of

Describe and illustrate the use of

a computerized accounting

a computerized accounting system.system.

33

Computerized Accounting SystemComputerized Accounting System

o Computerized accounting systems have Computerized accounting systems have the following three main advantages over the following three main advantages over manual systems:manual systems: Computerized systems _______ the record-Computerized systems _______ the record-

keeping _______ by recording transactions in keeping _______ by recording transactions in electronic forms and, at the same time, _______ electronic forms and, at the same time, _______ them electronically to _______ and _______ them electronically to _______ and _______ ledger accounts.ledger accounts.

Computerized Accounting SystemComputerized Accounting System

Computerized systems are generally more Computerized systems are generally more ______ than _______ systems.______ than _______ systems.

Computerized systems provide management Computerized systems provide management with current _______ _______ information to with current _______ _______ information to support decision making, since account support decision making, since account balances are _______ as the transactions _______ balances are _______ as the transactions _______ ..



ObjectiveDescribe the basic features of e-

Describe the basic features of e-commerce.commerce.

44

______________________ ______________________

o Using the Internet to perform business Using the Internet to perform business transactions is termed _______ .transactions is termed _______ .

E-CommerceE-Commerce

o When transactions are between a When transactions are between a company and a consumer, it is termedcompany and a consumer, it is termed _______ _______ (________________ ) ____________ .(________________ ) ____________ .

E-COMMERCEE-COMMERCE

Three more advanced Three more advanced areas where the areas where the Internet is being used Internet is being used for business purposes for business purposes are:are:

___________________ ___________________ ______________________________________

_________________________________________________________ ___________________

____________________________________________________________________________



ObjectiveUse segment analysis in

Use segment analysis in

evaluating the operating

evaluating the operating

performance of a company.

performance of a company.

55

___________________ Analysis___________________ Analysis

o One way to report revenue is by different One way to report revenue is by different ___________________. Businesses may be ___________________. Businesses may be ___________________ by ___________________, ___________________ by ___________________, by ___________________ or by ___________________ or ___________________, or by type of ___________________, or by type of __________.__________.


Accounting Accounting

SystemsSystems

The EndThe EndThe EndThe End

student version

Documents

accounting systemschapter

systemsan accounting

reports accounting information

basic accounting systemsas

cengage learning

learning objectivejournalize

learning objectivedefine

subsidiary ledgersthe