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Student Version. Repetition is an important component, a key part of learning. In memory, the more times patterns of thought are repeated, the more likely you will be able to recall information.

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Student Version

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  1. Student Version • Repetition is an important component, a key part of learning. In memory, the more times patterns of thought are repeated, the more likely you will be able to recall information. • These PowerPoint slides have been modified from the lecture decks by making them fill-in-the-blank. Why? So that you get an opportunity to repeat a visual cue (from the lecture or the book) via completing text here. • In addition, most text book exhibits have been removed as they are available in your text directly.

  2. Accounting Systems Chapter 5

  3. Learning Objective 1 Define and describe an accounting system.

  4. _________ ___________Systems • An accounting ____________is the methods and procedures for __________, __________, __________, and __________a business’s financial and operating information.

  5. Basic Accounting Systems As a business grows and changes, accounting systems also change in the following three-step process. • ________________________________ ________________ • ________________________________________________ • ________________________________________________

  6. Basic Accounting Systems

  7. Basic Accounting Systems • ___________ ___________ are the policies and procedures that ___________ assets from ___________ , ensure that business information is ___________ , and ensure that laws and ___________ are being ___________ .

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

  9. Learning Objective 2 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.

  10. Manual Accounting Systems • Understanding a manual accounting system is useful in identifying relationships between accounting ___________ and ___________ .

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

  12. Subsidiary Ledgers • The primary ___________ , which contains all of the balance sheet and ___________ ___________ accounts, is called a ___________ ___________ .

  13. ___________ Ledgers • Each ___________ ledger is represented in the ___________ ledger by a summarizing account,called a ___________ account.

  14. Subsidiary Ledgers • The individual customer accounts are arranged in ___________ order in a subsidiary ledger called the ___________ ___________ ___________ ___________ ,or___________ ledger.

  15. Subsidiary Ledgers • The individual ___________ accounts are arranged in alphabetical order in a subsidiary ledger called the ___________ ___________ ___________ ___________ ,or ___________ ledger.

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

  17. Special Journals SELLING BUYING

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

  19. Special Journals • The ___________ journal is used for recording fees earned on ___________ .

  20. Special Journals • Cash fees earned would be recorded in the ___________ ___________ ___________ .

  21. Special Journals • ___________ made on account (on __________ ) are recorded in the purchases ___________ .

  22. Special Journals • All cash payments are recorded in the ___________ ___________ ___________ .

  23. Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 2014 1 2 3 4 5 6 1 2 3 4 5 6 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 Exhibit 3 (in steps) (continued)

  24. Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 2014 Mar. 2 615 Accessories By Claire 2 2 0 0 00 2014 Mar. 2 R35 2,200 2,200 Exhibit 3 (in steps) 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 27 618 Accessories by Claire 3 0 0 0 00 Accounts Receivable Subsidiary Ledger Accessories By Claire Date Item P.R. Debit Credit Balance (continued)

  25. 2014 Mar. 2 R35 2,200 2,200 Exhibit 3 (in steps) Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 2014 1 2 3 4 5 6 1 2 3 4 5 6 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 Accounts Receivable Subsidiary Ledger Accessories By Claire Date Item P.R. Debit Credit Balance (continued)

  26. Exhibit 3 (in steps) Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 2014 1 2 3 4 5 6 1 2 3 4 5 6 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 The same procedure would be used to post the other transactions to the individual accounts in the accounts receivable subsidiary ledger. (continued)

  27. Exhibit 3 (in steps) Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 2014 1 2 3 4 5 6 1 2 3 4 5 6 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 31 9 6 0 0 00 Next, the amount column would be totaled. (continued)

  28. Revenue Journal, page 35 Exhibit 3 (in steps) The debit total is posted from the revenue journal to Accounts Receivable in the general ledger. Accounts Receivable Account No. 12 ACCOUNT Balance Post. Ref. Dr. Cr. Date Item Cr. Dr. 2014 Mar. 1 Balance 3 400 00 31 9 600 00 R35 13 000 00 (continued)

  29. Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 1 2 3 4 5 6 1 2 3 4 5 6 Exhibit 3 (in steps) 2014 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 31 9 6 0 0 00 Mar. 2 615 Accessories By Claire 2 2 0 0 00 (12) Indicates a debit posting of $9,600 to Accounts Receivable (General Ledger Account 12) (continued)

  30. 2014 Mar. 31 Revenue Journal, page 35 Exhibit 3 (in steps) The credit total is posted from the revenue journal to Fees Earned in the general ledger. Fees Earned Account No. 41 ACCOUNT Balance Post. Ref. Dr. Cr. Date Item Cr. Dr. R35 9 600 00 9 600 00 (continued)

  31. Page 35 Revenue Journal Invoice Post Accts. Rec. – Debit Date No. Account Debited Ref. Fees Earned – Credit 1 2 3 4 5 6 1 2 3 4 5 6 Exhibit 3 (in steps) 2014 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 31 9 6 0 0 00 Mar. 2 615 Accessories By Claire 2 2 0 0 00 (12) (41) Indicates a credit posting of $9,600 to Fees Earned (General Ledger Account 41)

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

  33. 2014 Mar. 1 Exhibit 4 (in steps) CASH RECEIPTS JOURNAL Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. 2014 42 Mar. 1 Rent Revenue 400 400 19 Web Cantina 3,400 3,400 28 Accessories By Claire 2,200 2,200 30 RapZone 1,750 1,750 GENERAL LEDGER ACCOUNT Rent Revenue Acct. No. 42 Date Item P.R. Debit Credit Cr. Bal. 400 400 CR14 (continued)

  34. 2014 Mar. 1 Bal. 3,400 18 R35 2,650 6,050 Exhibit 4 (in steps) CASH RECEIPTS JOURNAL Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. 2014 42 Mar. 1 Rent Revenue 400 400 19 Web Cantina 3,400 3,400 28 Accessories By Claire 2,200 2,200 30 RapZone 1,750 1,750 Accounts Receivable Subsidiary Ledger Web Cantina Date Item P.R. Debit Credit Balance 3,400 19 2,650 CR14 (continued)

  35. Cash Receipts Journal • After all journalizing and posting to individual accounts for the month is complete, the columns are totaled.

  36. A check mark indicates that items in this column are posted individually. Exhibit 4 (in steps) CASH RECEIPTS JOURNAL Page 14 Other Accounts Post Accounts Receivable Cash Date Account Credited Ref. Cr. Cr. Dr. 2014 42 Mar. 1 Rent Revenue 400 400 19 Web Cantina 3,400 3,400 28 Accessories By Claire 2,200 2,200 30 RapZone 1,750 1,750 400 7,350 7,750 31 ( ) ( ) ( ) 12 11 (continued)

  37. _________ _________ Account • The total of the accounts in the accounts receivable _________ ledger should _________ the balance in the _________ _________ _________ _________ account.

  38. _________ Journal • The _________ _________ is designed for recording all purchases on _________ .

  39. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 (continued)

  40. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 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)

  41. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 Accounts Payable Subsidiary Ledger Howard Supplies Date Item P.R. Dr. Cr. Balance 2014 Mar. 3 600 P11 600 (continued)

  42. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 The other entries to the accounts payable subsidiary ledger are recorded using the same procedure. (continued)

  43. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2012 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 18 This posting reference indicates that Office Equipment (Account 18) is debited in the general ledger for $2,800.

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

  45. Exhibit 5 (in steps) Page 11 PURCHASES JOURNAL Accts. Other Post Payable Supplies Accounts Post Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount 2014 Mar. 3 Howard Supplies 600 600 7 Donnelly Supplies 420 420 12 Jewett Bus. Sys. 2,800 Off. Equip. 18 2,800 19 Donnelly Supplies 1,450 1,450 27 Howard Supplies 960 960 31 6,230 3,430 2,800 ( ) ( ) ( ) 21 Supplies would be debited for $3,430 and 14 written in the parentheses. GENERAL LEDGER ACCOUNT Accounts Payable No. 21 Date Item P.R. Debit Credit Balance 2014 Mar. 1 Bal 1,230 31 P11 6,230 7,460

  46. _________ Payments Journal • All transactions involving a credit to _________ are recorded in the _________ _________ _________ .

  47. Exhibit 6 (in steps) CASH PAYMENTS JOURNAL PAGE 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr 2014 Mar. 2 150 Rent Expense 1,600 1,600 On March 2, 2014, issued Check 150 for rent of $1,600. (continued)

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

  49. 2014 Mar. 2 Exhibit 6 (in steps) CASH PAYMENTS JOURNAL PAGE 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr 2014 Mar. 2 150 Rent Expense 1,600 1,600 52 General Ledger Account Rent Expense Account No. 52 Date Item P.R. Dr. Cr. Balance CP7 1,600 1,600 (continued)

  50. Exhibit 6 (in steps) CASH PAYMENTS JOURNAL PAGE 7 Other Accounts Ck. Post Accounts Payable Cash Date No. Account Debited Ref. Dr. Dr. Cr 2014 Mar. 2 150 Rent Expense 1,600 1,600 52 15 151 Grayco Supplies 1,230 1,230 On March 15, issued Check 151 to Grayco Supplies for $1,230. (continued)

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