C5 - 1 Learning Objectives Power Notes Accounting Systems and Internal Controls Accounting Systems and Internal Controls 1.Basic Accounting Systems 2.Internal.

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Presentation transcript:

C5 - 1 Learning Objectives Power Notes Accounting Systems and Internal Controls Accounting Systems and Internal Controls 1.Basic Accounting Systems 2.Internal Control 3.Manual Accounting Systems 4.Adapting Manual Accounting Systems 5.Computerized Accounting Systems Chapter 5 C5

C5 - 2 Internal Control Framework, Procedures Special Journals, Ledgers Revenue Journal and Ledgers Cash Receipts Journal and Ledgers Purchases Journal and Ledgers Cash Payments Journal and Ledgers Slide # Power Note Topics Note: To select a topic type the slide # and press Enter. Power Notes Chapter 5 Accounting Systems and Internal Controls Accounting Systems and Internal Controls

C Control Environment Control Environment Internal Control Framework

C Control Environment 2.Risk Assessment Risk Assessment Control Environment Internal Control Framework

C Control Environment 2.Risk Assessment 3.Control Procedures Control Procedures Risk Assessment Control Environment Internal Control Framework

C Control Environment 2.Risk Assessment 3.Control Procedures 4.Monitoring Monitoring Control Procedures Risk Assessment Control Environment Internal Control Framework

C5 - 7 Internal Control Framework 1.Control Environment 2.Risk Assessment 3.Control Procedures 4.Monitoring 5.Information and Communication Communication Monitoring Control Procedures Risk Assessment Control Environment

C5 - 8 Internal Control Procedures Competent Personnel Rotating Duties Assigning Responsibility Separating Responsibilities for Related Operations Separating Accounting and Asset Custody Proofs and Security Measures

C5 - 9 Cash Accts. Payable General Ledger Accts. Receivable Supplies General Ledger and Subsidiary Ledgers

C Cash Accts. Payable General Ledger Accounts Receivable Subsidiary Ledger A BCD Customer Accounts Accts. Receivable Supplies General Ledger and Subsidiary Ledgers

C Cash General Ledger and Subsidiary Ledgers Supplies Accts. Payable General Ledger Accounts Receivable Subsidiary Ledger A BCD Customer Accounts Accts. Receivable Accounts Payable Subsidiary Ledger A BCD Creditor Accounts

C SELLING BUYING Special Journals

C Rendering of services on account SELLING Revenue Journal Revenue Journal recorded in BUYING Special Journals

C Rendering of services on account SELLING Revenue Journal Revenue Journal Cash Receipts Journal Receipt of cash from any source recorded in BUYING Special Journals

C Rendering of services on account SELLING Revenue Journal Revenue Journal Cash Receipts Journal Purchases Journal Receipt of cash from any source Purchase of items on account recorded in BUYING Special Journals

C Special Journals Rendering of services on account SELLING Revenue Journal Revenue Journal Cash Receipts Journal Cash Receipts Journal Purchases Journal Purchases Journal Cash Payments Journal Cash Payments Journal Receipt of cash from any source Purchase of items on account Payment of cash for any purpose recorded in BUYING

C /2615MyMusicClub.com 2,200 3/6616RapZone.com 1,750 3/18617Web Cantina2,650 3/27618MyMusicClub.com 3,000 Totals9,600 Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35 The Revenue Journal All sales on account are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register.

C Accounts Receivable Subsidiary Ledger DateItemP.R. DebitCreditBalance MyMusicClub.com Each debit is posted to the accounts receivable subsidiary ledger. Posting to the Subsidiary Ledger Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35 2,200 3/2615 MyMusicClub.com 2,200 1,750 3/6616 RapZone.com 1,750 2,650 3/18617 Web Cantina2,650 3,000 3/27618 MyMusicClub.com 3,000 Totals9,600

C Accounts Receivable Subsidiary Ledger DateItemP.R. DebitCreditBalance MyMusicClub.com 3/2R35 2,2002,200 Each debit is posted to the accounts receivable subsidiary ledger. Posting to the Subsidiary Ledger Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35 2,200 3/2615 MyMusicClub.com  2,200 1,750 3/6616 RapZone.com 1,750 2,650 3/18617 Web Cantina2,650 3,000 3/27618 MyMusicClub.com 3,000 Totals9,600

C Accounts Receivable Subsidiary Ledger DateItemP.R. DebitCreditBalance MyMusicClub.com 3/1R352,2002,200 3/27R353,0005,200 Each debit is posted to the accounts receivable subsidiary ledger. Posting to the Subsidiary Ledger Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35     2,200 3/2615 MyMusicClub.com 2,200 1,750 3/6616 RapZone.com 1,750 2,650 3/18617 Web Cantina2,650 3,000 3/27618 MyMusicClub.com 3,000 Totals9,600

C General Ledger DateItemP.R. DebitCreditBalance  Account: Accounts Receivable No. 12 3/1Bal 3,400 The total is posted to Accounts Receivable AND to Fees Earned. Posting to the General Ledger Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35     3/2615 MyMusicClub.com 2,200 3/6616 RapZone.com 1,750 3/18617 Web Cantina2,650 3/27618 MyMusicClub.com 3,000 9,600 Totals9,600

C General Ledger DateItemP.R. DebitCreditBalance  Account: Accounts Receivable No. 12 The total is posted to Accounts Receivable AND to Fees Earned. Posting to the General Ledger Revenue Journal Invoice PostAccts. Rec. – Debit Date No.Account Debited Ref.Fees Earned – Credit Page 35     3/1Bal 3,400 9,600 3/31R359,60013,000 3/2615 MyMusicClub.com 2,200 3/6616 RapZone.com 1,750 3/18617 Web Cantina2,650 3/27618 MyMusicClub.com 3,000 9,600 Totals9,600 (12) (41)

C /1 Rent Revenue /19 Web Cantina3,4003,400 3/28 MyMusicClub.com2,2002,200 3/30 RapZone.com 1,7501,750 Totals4007,3507,750 Cash Receipts Journal OtherAccounts PostAccounts ReceivableCash DateAccount CreditedRef.CreditCreditDebit Page 14 The Cash Receipts Journal All cash received from any source is recorded in this journal. The total Cash Debit column equals the total of the two credit columns.

C /1 Rent Revenue ,400 3/19 Web Cantina3,4003,400 2,200 3/28 MyMusicClub.com2,2002,200 1,750 3/30 RapZone.com 1,7501,750 Totals4007,3507,750 Accounts Receivable Subsidiary Ledger DateItemP.R. DebitCreditBalance Web Cantina Each Accounts Receivable credit is posted to the accounts receivable subsidiary ledger. Cash Receipts Journal OtherAccounts PostAccounts ReceivableCash DateAccount CreditedRef.CreditCreditDebit Page 14 Posting to the Subsidiary Ledger 3/1Bal 3,400 3/27R352,6506,050 

C Accounts Receivable Subsidiary Ledger DateItemP.R. DebitCreditBalance Web Cantina Each Accounts Receivable credit is posted to the accounts receivable subsidiary ledger. Cash Receipts Journal OtherAccounts PostAccounts ReceivableCash DateAccount CreditedRef.CreditCreditDebit Page 14  Posting to the Subsidiary Ledger 3/1Bal 3,400 3/18R352,6506,050 3,400 3/19CR143,4002,650  3/1 Rent Revenue ,400 3/19 Web Cantina3,4003,400 2,200 3/28 MyMusicClub.com2,2002,200 1,750 3/30 RapZone.com 1,7501,750 Totals4007,3507,750

C The three highlighted items are posted to the general ledger. Cash Receipts Journal OtherAccounts PostAccounts ReceivableCash DateAccount CreditedRef.CreditCreditDebit Page 14     Posting to the General Ledger 400 3/1 Rent Revenue /19 Web Cantina3,4003,400 3/28 MyMusicClub.com2,2002,200 3/30 RapZone.com 1,7501,750 7,3507,750 Totals4007,3507,750 ( ) General Ledger DateItemP.R. DebitCreditBalance  Account: Accounts Receivable No. 12 3/1Bal 3,400 3/31R359,60013,000

C The three highlighted items are posted to the general ledger. Cash Receipts Journal OtherAccounts PostAccounts ReceivableCash DateAccount CreditedRef.CreditCreditDebit Page 14     Posting to the General Ledger 400 3/1 Rent Revenue /19 Web Cantina3,4003,400 3/28 MyMusicClub.com2,2002,200 3/30 RapZone.com 1,7501,750 7,3507,750 Totals4007,3507,750 ( )(12)(11) General Ledger DateItemP.R. DebitCreditBalance  Account: Accounts Receivable No. 12 3/1Bal 3,400 3/31R359,60013,000 7,350 3/31CR147,3505,650

C General Ledger Accounts Receivable Control Account DateItemP.R. DebitCreditBalance Account: Accounts ReceivableNo. 12 3/1Bal. 3,400 3/31R359,60013,000 5,650 3/31CR147,3505,650  If the accounts receivable account in the general ledger only shows summary totals, where are the individual customer balances?

C MyMusicClub.com DateItemP.R. DebitCreditBalance RapZone.com 3/6 R35 1,7501, /30CR141,7500 DateItemP.R. DebitCreditBalance Web Cantina DateItemP.R. DebitCreditBalance 3/2R352,200 2,200 3/27R353,000 5,200 3,000 3/28CR142,2003,000 3/1Bal. 3,400 3/18R352,6506,050 2,650 3/19CR143,4002,650  General Ledger Accounts Receivable Control Account DateItemP.R. DebitCreditBalance Account: Accounts ReceivableNo. 12 3/1Bal. 3,400 3/31R359,60013,000 5,650 3/31CR147,3505,650  Accounts Receivable Subsidiary Ledger

C MyMusicClub.com DateItemP.R. DebitCreditBalance RapZone.com 3/6 R35 1,7501, /30CR141,7500 DateItemP.R. DebitCreditBalance Web Cantina DateItemP.R. DebitCreditBalance 3/2R352,200 2,200 3/27R353,000 5,200 3,000 3/28CR142,2003,000 3/1Bal. 3,400 3/18R352,6506,050 2,650 3/19CR143,4002,650  General Ledger Accounts Receivable Control Account DateItemP.R. DebitCreditBalance Account: Accounts ReceivableNo. 12 3/1Bal. 3,400 3/31R359,60013,000 5,650 3/31CR147,3505,650  Accounts Receivable Subsidiary Ledger

C /3Howard Supplies /7Donnelly Supplies /12Jewett Bus. Syst.2,800Office Equip. 2,800 3/19Donnelly Supplies1,4501,450 3/27Howard Supplies Totals6,2303,4302,800 Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11 The Purchases Journal All purchases on account are recorded in this journal. The total credits to Accounts Payable equals the total of the two debit columns.

C Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11 Accounts Payable Subsidiary Ledger DateItemP.R. DebitCreditBalance Howard Supplies Each credit is posted to the accounts payable subsidiary ledger. Posting to the Subsidiary Ledger 600 3/3Howard Supplies /7Donnelly Supplies ,800 3/12Jewett Bus. Syst.2,800Office Equip. 2,800 1,450 3/19Donnelly Supplies1,4501, /27Howard Supplies Totals6,2303,4302,800

C Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11 Accounts Payable Subsidiary Ledger DateItemP.R. DebitCreditBalance Howard Supplies Each credit is posted to the accounts payable subsidiary ledger. Posting to the Subsidiary Ledger 600 3/3P /3Howard Supplies  /7Donnelly Supplies ,800 3/12Jewett Bus. Syst.2,800Office Equip. 2,800 1,450 3/19Donnelly Supplies1,4501, /27Howard Supplies Totals6,2303,4302,800

C Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11      Accounts Payable Subsidiary Ledger DateItemP.R. DebitCreditBalance Howard Supplies Each credit is posted to the accounts payable subsidiary ledger. Posting to the Subsidiary Ledger 3/3P /27P119601, /3Howard Supplies /7Donnelly Supplies ,800 3/12Jewett Bus. Syst.2,800Office Equip. 2,800 1,450 3/19Donnelly Supp.1,4501, /27Howard Supplies Totals6,2303,4302,800

C DateItemP.R. DebitCreditBalance Account: Accounts PayableNo. 21 General Ledger 3/1Bal. 1,230  The highlighted items are posted to the general ledger. Posting to the General Ledger Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11      3/3Howard Supplies /7Donnelly Supplies ,800 3/12Jewett Bus. Syst.2,800Office Equip. 2,800 3/19Donnelly Supp.1,4501,450 3/27Howard Supplies ,2303,430 Totals6,2303,4302,800 DateItemP.R. DebitCreditBalance 

C DateItemP.R. DebitCreditBalance Account: Accounts PayableNo. 21 General Ledger 3/1Bal. 1,230 6,230 3/31P116,2307,460  The highlighted items are posted to the general ledger. Posting to the General Ledger Purchases Journal Accts.Other PostPayableSuppliesAccountsPost DateAccount CreditedRef.CreditDebitDebitRef.Amount Page 11      3/3Howard Supplies /7Donnelly Supplies ,800 3/12Jewett Bus. Syst.2,800Office Equip. 182,800 3/19Donnelly Supp.1,4501,450 3/27Howard Supplies ,2303,430 Totals6,2303,4302,800 ( 21)(14)( ) DateItemP.R. DebitCreditBalance 

C /2150Rent Expense1,600 1,600 3/15151Grayco Supplies1,2301,230 3/21152Jewett Bus. Syst.2,8002,800 3/22153Donnelly Supp /30154Utilities Expense1,0501,050 3/31155Howard Supplies Totals2,6505,0507,700 Cash Payments Journal OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.DebitDebitCredit Page 7 The Cash Payments Journal All cash payments are recorded in this journal. Every check is listed in numerical order. This journal is often referred to as a check register.

C /2150Rent Expense1,600 1,600 1,230 3/15151Grayco Supplies1,2301,230 2,800 3/21152Jewett Bus. Syst.2,8002, /22153Donnelly Supp /30154Utilities Expense1,0501, /31155Howard Supplies Totals2,6505,0507,700 Cash Payments Journal OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.DebitDebitCredit Page 7 Accounts Payable Subsidiary Ledger DateItemP.R. DebitCreditBalance  Grayco Supplies 3/1Bal. 1,230 Each Accounts Payable debit is posted to the accounts payable subsidiary ledger. Posting to the Subsidiary Ledger

C /2150Rent Expense1,600 1,600 1,230 3/15151Grayco Supplies1,2301,230 2,800 3/21152Jewett Bus. Syst.2,8002, /22153Donnelly Supp /30154Utilities Expense1,0501, /31155Howard Supplies Totals2,6505,0507,700 Cash Payments Journal OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.DebitDebitCredit Page 7  Accounts Payable Subsidiary Ledger DateItemP.R. DebitCreditBalance  Grayco Supplies 3/1Bal. 1,230 1,230 3/15CP71,2300 Each Accounts Payable debit is posted to the accounts payable subsidiary ledger. Posting to the Subsidiary Ledger

C Cash Payments Journal OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.DebitDebitCredit Page 7      1,600 3/2150Rent Expense1,600 1,600 3/15151Grayco Supplies1,2301,230 3/21152Jewett Bus. Syst.2,8002,800 3/22153Donnelly Supp ,050 3/30154Utilities Expense1,0501,050 3/31155Howard Supplies ,0507,700 Totals2,6505,0507,700 ( ) DateItemP.R. DebitCreditBalance Account: Accounts PayableNo. 21 General Ledger 3/1Bal. 1,230 3/31P116,2307,460  Posting to the General Ledger The highlighted items are posted to the general ledger.

C Cash Payments Journal OtherAccounts Ck.PostAccounts PayableCash DateNo.Account DebitedRef.DebitDebitCredit Page 7      1,600 3/2150Rent Expense521,600 1,600 3/15151Grayco Supplies1,2301,230 3/21152Jewett Bus. Syst.2,8002,800 3/22153Donnelly Supp ,050 3/30154Utilities Expense541,0501,050 3/31155Howard Supplies ,0507,700 Totals2,6505,0507,700 ( )(21)(11) DateItemP.R. DebitCreditBalance Account: Accounts PayableNo. 21 General Ledger 3/1Bal. 1,230 3/31P116,2307,460 5,050 3/31CP75,0502,410  The highlighted items are posted to the general ledger. Posting to the General Ledger

C Note: To see the topic slide, type 2 and press Enter. This is the last slide in Chapter 5. Power Notes Chapter 5 Accounting Systems and Internal Controls Accounting Systems and Internal Controls