7 - 1 PowerPoint Authors: Susan Coomer Galbreath, Ph.D., CPA Charles W. Caldwell, D.B.A., CMA Jon A. Booker, Ph.D., CPA, CIA Cynthia J. Rooney, Ph.D., CPA Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Accounting Information Systems Chapter 7

7 - 2 Fundamental System Principles C1 Accounting information systems collect and process data from transactions and events, organize them in useful reports, and communicate results to decisions makers.

7 - 3 Components of Accounting Systems C1 Keyboards Scanners Modems Bar-Code Reader Keyboards Scanners Modems Bar-Code Reader Hardware Software Professional Judgment Hardware Software Professional Judgment Increasingly, source documents are electronic files creating a “paperless” system.

7 - 4 Components of Accounting Systems C1 CD/DVD Hard Drive Tape Paper Document CD/DVD Hard Drive Tape Paper Document Printer Monitor Projectors Web communications Printer Monitor Projectors Web communications

7 - 5 Special Journals in Accounting C2

7 - 6 Subsidiary Ledgers Subsidiary ledgers are a listing of individual accounts with common characteristics. Characteristic Controlling Account Subsidiary Ledger Amounts due from customers Accounts Receivable Accounts Receivable Ledger Amounts owed to creditors Accounts Payable Accounts Payable Ledger C3

7 - 7 Accounts Receivable Ledger equal to After all items are posted, the balance in the accounts receivable controlling account is equal to the sum of the balances in the accounts receivable subsidiary ledger. C3

7 - 8 Sales Journal P1

7 - 9 Proving the Ledgers P2 The balance of the Accounts Receivable controlling account in the general ledger should equal the accounts in the accounts receivable subsidiary ledger. A schedule of accounts receivable lists each customer and the balance owed.

Sales Taxes P1 Governmental agencies often require sellers to collect sales taxes from customers and to periodically send these taxes to the appropriate agency.

Sales Returns and Allowances If a company has few sales returns, they may be recorded in the General Journal. A company with many sales returns may use a Sales Returns and Allowances Journal. P1

P1 Cash Receipts Types 1.Cash from credit customers 2.Cash from cash sales 3.Cash from other sources

Footing, Crossfooting, and Posting P1

P1

Proving the Ledger P2 The balance of the Accounts Payable controlling account in the general ledger should equal the accounts in the accounts payable subsidiary ledger. A schedule of accounts payable lists each supplier and the balance owed to them.

P1

General Journal Transactions Adjusting Entries Purchase Returns & Allowances ClosingEntriesClosingEntries P1 Sales Returns & Allowances

Computer Technology in Accounting Off-the-Shelf Software Familiar accounting programs such as Peachtree® and QuickBooks® are designed to be user friendly and menu driven. Integrated Software Actions taken in one part of the system automatically affect related parts. For instance, when a credit sale is entered, several parts of the system are automatically updated.

Data Processing in Accounting  Online processing enters and processes data immediately.  Batch processing accumulates information for a period of time and then processes all the data at one time (daily, weekly, or monthly).

Computer Networks in Accounting Computer networks are links among computers giving different users access to common databases and programs. Server Work Stations

Enterprise Resource Planning Software (ERP) Programs that manage and integrate a company’s vital operations.

Cloud Computing Cloud computing is the delivery of computing as a service rather than a product. Cloud computing uses applications via the Web instead of installing them on one's own computer. Cloud Computing Cell Phone Laptop Computer Tablet

Global View Systems Principles and Components Both U.S. GAAP and IFRS aim for high-quality financial reporting. System principles and components are fundamentally similar across the globe. However, culture and other realities often mean different emphases on the mix of system controls. Special Journals Accounting systems for recording sales, purchases, and cash receipts and disbursements are similar worldwide. Systems that employ special journals are applied worldwide. Further, the basic structure of special journals as explained in this chapter is one means to company efficiency.

A good AIS collects financial data for a company’s various segments. Segment Return on Assets A segment is a part of a company that is separately identified by its products, services, or geographic market. A1 Companies Reporting Operations by Segments *Total exceeds 100% because companies can report more than one segment.

Segment Return on Assets Segment return on assets = Segment operating income Segment average assets A1 Callaway Golf Company reports that it operates in two business segments: (1) golf clubs and (2) golf balls. The golf club segment shows a higher return on assets.

End of Chapter 7