© 2007 McGraw-Hill Ryerson Ltd. Electronic Presentations in Microsoft® PowerPoint® Accounting Information Systems C H A P T E R 8 Slides Content 1-3 Learning objectives 4-7 MIS & AIS 8 Accounting and technology 9-12 Special journals and subledgers 13-14 Mini-quiz 15-26 Sales journal 27-29 Cash receipts journal 30-31 Purchase journal 32-33 Cash disbursements journal 34 General journal 35 Mini-quiz 36-40 Appendix 8A 41 Appendix 8B 42-44 Review 45 End © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Learning Objectives Explain the relationship of the accounting information system to the management information system and identify the components of an AIS Explain the goals and uses of special journals. Describe the use of controlling accounts and subledgers. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Learning Objectives Journalize and post transactions using special journals. Prepare and test the accuracy of subledgers. Apply journalizing and posting of transactions using special journals in a periodic inventory system. (Appendix 8A) Journalize and post transactions with sales taxes to special journals. (Appendix 8B) © 2007 McGraw-Hill Ryerson Ltd.

Management Information Systems A system designed to collect and process data within an organization for the purpose of providing users with information. © 2007 McGraw-Hill Ryerson Ltd.

Management Information System Internal External Community Competitors Customers Government Industry Suppliers Sales and Marketing System Finance System Accounting Information System Human Resources System Production System © 2007 McGraw-Hill Ryerson Ltd.

Accounting Information Systems (AIS) The people, records, methods, and equipment that collect and process data from transactions and organize them in useful forms, and communicate results to decision makers. © 2007 McGraw-Hill Ryerson Ltd.

Accounting Information System Components of an AIS Feedback Loop Accounting Information System Accounts Payable Payroll Capital Assets Accounts Receivable Outputs Reports/ Information to Internal/ External Users Inputs Source Documents © 2007 McGraw-Hill Ryerson Ltd.

Accounting and Technology Impact of technology-based systems on accounting. Electronic funds transfer (EFT) E-commerce Computer hardware Computer software © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Special Journals Most organizations use Special Journals to enhance efficiency of transaction processing. Types Sales Journal Cash Receipts Journal Purchases Journal Cash Disbursements Journal © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Subledgers A listing of individual accounts with a common characteristic. Common Subledgers Accounts Receivable Accounts Payable Inventory © 2007 McGraw-Hill Ryerson Ltd.

Accounts Receivable Subledger A separate subledger account is used to show how much each individual customer owes. © 2007 McGraw-Hill Ryerson Ltd.

Accounts Receivable Subledger After all items are posted, the balance in the Accounts Receivable controlling account must equal the sum of the balances in the subledger. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Mini-Quiz 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. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Mini-Quiz 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. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Sales Journal The sales journal is used to record sales of merchandise on credit. © 2007 McGraw-Hill Ryerson Ltd.

Sales Journal — Example 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 inventory system.) © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. 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. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Sales Journal Similarly, each transaction yields a debit to Cost of Goods Sold and a credit to Inventory. Therefore, these accounts can also be included together in one column. This column total would also be posted monthly. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Sales Journal Daily, each transaction is posted to the appropriate Accounts Receivable subledger account. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Sales Journal A  in the PR column indicates the transaction has been posted to the subledger account. © 2007 McGraw-Hill Ryerson Ltd.

Here is the Sales Journal after recording some additional sales. © 2007 McGraw-Hill Ryerson Ltd.

On Feb. 28th , post the column total to Accounts Receivable and Sales. Sales Journal On Feb. 28th , post the column total to Accounts Receivable and Sales. 2011 Feb. 2 S1 2,150 2,150 2011 © 2007 McGraw-Hill Ryerson Ltd. Feb. 2 S1 2,150 2,150

Now post to the COGS and Inventory accounts … Sales Journal Now post to the COGS and Inventory accounts … 2011 Feb. 2 S1 1,500 1,500 2011 © 2007 McGraw-Hill Ryerson Ltd. Feb. 2 S1 1,500 1,500

… and include the posting references. Sales Journal … and include the posting references. 2011 Feb. 2 S1 1,500 1,500 2011 © 2007 McGraw-Hill Ryerson Ltd. Feb. 2 S1 1,500 1,500

© 2007 McGraw-Hill Ryerson Ltd. Testing the Ledger The Accounts Receivable controlling account and the subledger are in balance. © 2007 McGraw-Hill Ryerson Ltd.

Sales Returns and Allowances 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. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Cash Receipts Journal The cash receipts journal is used to record all receipts of cash. © 2007 McGraw-Hill Ryerson Ltd.

Cash Receipts Journal — Example Categories of Cash Receipts Cash from cash sales Cash from credit customers Cash from other sources © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Cash Receipts Journal © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Purchases Journal The Purchases Journal is used to record all purchases on credit. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Purchases Journal © 2007 McGraw-Hill Ryerson Ltd.

Cash Disbursements Journal The Cash Disbursements Journal is used to record all payments of cash. Outdoors Unlimited © 2007 McGraw-Hill Ryerson Ltd.

Cash Disbursements Journal © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. General Journal Used for all transactions not recorded in a special journal. Closing entries Adjusting entries Correcting entries Other entries © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Mini-Quiz Give the name of the journal in which the following transactions should be recorded. Purchased equipment on credit. Sold merchandise for cash. Paid for supplies that were purchased on account. Sold merchandise on account. PJ CRJ CDJ SJ © 2007 McGraw-Hill Ryerson Ltd.

Special Journals Under a Periodic System-Appendix 8A Recording and posting is similar to a perpetual system. Some of the columns change in a periodic system. © 2007 McGraw-Hill Ryerson Ltd.

Sales Journal — Periodic System The column for Cost of Goods Sold and Inventory is not needed with the periodic system. © 2007 McGraw-Hill Ryerson Ltd.

Cash Receipts Journal Periodic System The column for Cost of Goods Sold and Inventory is not needed with the periodic system. © 2007 McGraw-Hill Ryerson Ltd.

Purchases Journal — Periodic System The Inventory column in the perpetual system is replaced with Purchases column in the periodic system. © 2007 McGraw-Hill Ryerson Ltd.

Cash Disbursements Journal Periodic System The Inventory column in the perpetual system is replaced with Purchases Discounts column in the periodic system. © 2007 McGraw-Hill Ryerson Ltd.

Special Journals and Sales Taxes- Appendix 8B Additional columns must be added to special journals to record PST and GST. Column Needed Journal PST Payable GST Payable GST Receivable Sales yes Cash Rec. Purchases Cash Disb. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Review Identify the different types of special journals? Sales journal Cash receipts journal Purchases journal Disbursements journal © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Review What is the purpose of special journals? Special journals help reduce the costs related to the time and effort of posting accounts. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. Review Why 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. © 2007 McGraw-Hill Ryerson Ltd.

© 2007 McGraw-Hill Ryerson Ltd. End of Chapter © 2007 McGraw-Hill Ryerson Ltd.