5-1 1 Accounting Using Excel for Success PowerPoint Presentation by: Douglas Cloud, Professor Emeritus Accounting, Pepperdine University © 2011 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password- protected website for classroom use. Accounting Systems 5 Student Version

5-2 2 Define and describe an accounting system

5-3 3 An accounting system is the methods and procedures for collecting, classifying, summarizing, and reporting a business’s financial and operating information. 1 Accounting System

5-4 4 As a business grows and changes, accounting systems also change in the following three-step process: Step 1. Analyze user information needs. Step 2. Design the system to meet the user needs. Step 3. Implement the system. 1

5-5 5 Once a system has been implemented, feedback, or input from the users of the information can be used to analyze and improve the system. 1 Feedback

5-6 6 Internal controls are policies and procedures that protect assets from misuse, ensure that business information is accurate, and ensure that laws and regulations are being followed. 1 Internal Controls

5-7 7 Processing methods are the means by which the system collects, summarizes, and reports accounting information. These methods may be either manual or computerized. 1 Processing Methods

5-8 8 Journalize and post transactions in a manual accounting system that uses subsidiary ledgers and special journals

5-9 9 A large number of individual accounts with a common characteristic can be grouped together in a separate ledger called a subsidiary ledger. 2 Subsidiary Ledger

The primary ledger, which contains all of the balance sheet and income statement accounts, is called a general ledger. 2 General Ledger

Each subsidiary ledger is represented in the general ledger by a summarizing account, called a controlling account. 2 Controlling Account

The individual customers’ accounts are arranged in alphabetical order in a subsidiary ledger called the accounts receivable subsidiary ledger or customers ledger. 2

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

Each special journal is designed to be used for recording a single kind of transaction that occurs frequently. 2 Special Journal

SELLING Providing services on account Revenue Journal Revenue Journal recorded in Receipt of cash from any source Cash Receipts Journal Cash Receipts Journal recorded in Special Journals 2

Purchase of items on account Purchases Journal recorded in Payment of cash for any purpose Cash Payments Journal recorded in Special Journals 2 BUYING

The all-purpose two-column journal, called the general journal or simply the journal can be used for entries that do not fit into any of the special journals. 2 General Journal

The revenue journal is used for recording fees earned on account. Cash fees earned would be recorded in the cash receipts journal. 2 Other Special Journals

Revenue Journal Exhibit 2

Revenue Journal Postings to Ledger Exhibit 3

All transactions that involve the receipt of cash are recorded in a cash receipts journal. Every entry recorded in the cash receipts journal will involve a debit to the “Cash Dr.” column. 2 Cash Receipts Journal

Cash Receipts Journal and Postings Exhibit 4

Accounts Receivable—(Controlling) Balance, March 1, 2010$3,400 Total debits (from revenue journal)9,600 Total credits (from cash receipts journal) (7,350) Balance, March 31, 2010$5,650 NetSolutions’ Accounts Receivable Subsidiary Ledger Customer Balance Summary Report, March 31, 2010 Accessories By Claire$3,000 RapZone0 Web Cantina 2,650 Total accounts receivable$5,650 2

The purchases journal is designed for recording all purchases on account. 2 Purchases Journal

Purchases Journal and Postings Exhibit 5

All transactions involving a credit to Cash are recorded in the cash payments journal. 2 Cash Payments Journal

Cash Payments Journal and Postings Exhibit 6

Accounts Payable Control Account and Subsidiary Ledger Accounts Payable (Control) Balance, March 1, 2010$1,230 Total credits (from purchases journal)6,230 Total debits (from cash payments journal) (5,050) Balance, March 31, 2010$2,410 NetSolutions Supplier Balance Summary Report March 31, 2010 Donnelly Supplies$1,450 Grayco Supplies0 Howard Supplies960 Jewett Business Systems 0 Total$2,410

29 Describe and give examples of other subsidiary ledgers and modified special journals

A business may modify its special journals by adding one or more columns for recording transactions that occur frequently. 3

Nov. 2 NetSolutions issued Invoice No. 842 to Litten Company for $4,770, which included sales taxes of $270. 3Issued Invoice No. 843 to Kauffman Supply Company for $1,166, which included sales taxes of $66. 3

Modified Special Journal 3

Describe and illustrate the use of a computerized accounting system

Computerized Accounting System 1.Computerized systems simplify the record-keeping process in that transactions are recorded in electronic forms and, at the same time, posted electronically to general and subsidiary ledger accounts. 4

Computerized systems are generally more accurate than manual systems. 3.Computerized systems provide management with current account balance information to support decision making, since account balances are posted as the transactions occur. 4

Exhibit 7 Revenue and Cash Receipts in QuickBooks © (continued) 4

Exhibit 7 Revenue and Cash Receipts in QuickBooks © (continued)

Describe the basic features of e-commerce

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

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

Three more advanced areas where the Internet is being used for business purposes are: 1.Supply chain management (SCM) 2.Consumer relationship management (CRM) 3.Product life-cycle management (PLM) 5