Accounting Systems

1. Accounting Systems By Rachelle Agatha, CPA, MBA Slides by Rachelle Agatha, CPA, with excerpts from Warren, Reeve, Duchac

2. 0 After studying this chapter, you should be able to: • Define an accounting system and describe its implementation. • Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.

3. 0 • Describe and give examples of additional subsidiary ledgers and modified special journals. • Understand the overview process of a computerized system. • Describe the basic features of e-commerce.

4. 0 5-1 Objective 1 Define an accounting system and describe its implementation.

5. 0 Accounting Systems Growth Process

6. 0 Once a system has been implemented, feedback, or input from the users of the information can be used to analyze and improve the system.

7. 0 Internal Controls: Are an integral part of any organization's financial and business policies and procedures. Ensure that business information is accurate, and ensure that laws and regulations are being followed

8. 0 5-1 Processing methods are the means by which the system collects, summarizes, and reports accounting information.

9. 0 5-1 Processing methods may be either manualor computerized.

10. 0 5-2 Objective 2 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals.

11. 0 5-2 A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called a subsidiary ledger.

12. 0 5-2 The primary ledger, which contains all of the balance sheet and income statement accounts, is called a general ledger.

13. 0 Each subsidiary ledger is represented in the general ledger by a summarizing account, called the control account. 5-2 • Cashis the Control Accountfor the cash payments and cash receipts • Accounts Receivableis the Control Accountfor the Acct Rec Ledger • Accounts Payable is the Control Accountfor the Acct Payable Ledger

14. 0 5-2 The individual customers’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts receivable subsidiary ledgerorcustomers ledger.

15. 0 5-2 The individual creditors’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts payable subsidiary ledger, or creditors ledger.

16. Accounts Receivable Subsidiary Ledger Customer Accounts A B C D Accounts Payable Subsidiary Ledger Creditor Accounts A B C D 0 5-2 General Ledger and Subsidiary Ledgers General Ledger Cash 11 Accts. Rec. 12 Supplies 14 Accts. Pay. 21 17

19. The all-purpose two-column journal, called the general journalor simply thejournalcan be used for entries that do not fit into any of the special journals.

23. 0 5-4 Objective 4 Apply computerized accounting to the revenue and collection cycle.

24. Transactions are entered from a source document (data entry) • Accounting system processes transaction • Data is posted to control account via batch posting or real time • Month is closed and accounts are updated with all transactions – reports can be run

25. 0 5-5 Objective 5 Describe the basic features of e-commerce.

26. 0 5-5 e-Commerce Using the Internet to perform business transactions is termed e-commerce.

27. E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet, Also known as E-Business

28. 0 5-5 When transactions are between a company and a consumer, it is termed B2C(business-to-consumer)e-commerce.

29. 0 5-5 Three more advanced areas where the Internet is being used for business purposes are: • Supply chain management (SCM) • Consumer relationship management (CRM) • Product life-cycle management (PLM)

30. Summary • Accounting Systems • Subsidiary Ledgers • Special Journals • E-Commerce • .