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Computerized AIS (AIS, TPS and Double-Entry).ppt
- 1. Jan 2016 1 ComputerizedAccounting Information Systems OVERVIEW
- 2. Jan 2016 2 TransactionProcessing System Architectures • A firm’s transaction processing systems may either be manual or computerized
- 3. Computerized Transaction Processing System T1T2 T3 T4 T5 T6 T7 D1 D2 D3 D4 D5 D6 D7 D8 D9 P1 A1 D1 D2 D3 P2 M1 T8 T9 Display 3 Jan 2016
- 4. Jan 2016 4 Componentsof the Transaction Processing System • What are some examples of inputs? – customer orders – sales slips – invoices – purchase orders – employee time cards
- 5. Jan 2016 5 Componentsof the Transaction Processing System • Processing involves the use of journals and registers to provide a permanent and chronological record of inputs. • Journals are used to record financial accounting transactions. • Registers are used to record other types of data not directly related to accounting.
- 6. Jan 2016 6 Componentsof the Transaction Processing System • Special journals are used to record similar and recurring transactions. • What are examples of special journals? – sales journal – purchase journal – cash receipts journal – cash disbursements journal
- 7. Jan 2016 7 Componentsof the Transaction Processing System Source Documents Cash Receipts Journal Cash Disbursements Journal General Journal Purchases Journal Sales Journal
- 8. Jan 2016 8 Componentsof the Transaction Processing System • Ledgers and files provide storage of data in both manual and computerized systems. • Ledgers provide summaries of a firm’s financial accounting transactions. • A file is an organized collection of data. – transaction file – master file – reference or table file
- 9. Jan 2016 9 Componentsof the Transaction Processing System • What is an output? • It is any document generated in the system. • What are some examples of outputs? – trial balance – financial reports – operational reports – paychecks
- 10. Jan 2016 10 DesigningDouble-Entry Systems • An accounting system must “fit” a particular organization. • What must be taken into account in designing an accounting system? – the nature and purpose of the organization – its structural and functional characteristics – its physical layout, products, and services – the personnel who operate the system
- 11. Jan 2016 11 DesigningDouble-Entry Systems Hierarchical Model of an Accounting System Financial Statements Chart of Accounts Cycles Revenue Expenditure Production Application Systems Sales Accounts Receivable Purchasing Payroll Inventory Property Standard Journal Entries Identify accounts affected by each application system
- 12. Jan 2016 12 DesigningDouble-Entry Systems Hierarchical Model of an Accounting System Financial Statements Chart of Accounts Cycles Finance Financial Reporting Application Systems Cash General Ledger Standard Journal Entries Identify accounts affected by each application system Consolidation
- 13. Jan 2016 13 DesigningDouble-Entry Systems • What are the four stages involved in the design of an accounting system? 1 Design a rough classification of accounts, or chart of accounts, and related financial statements and reports. 2 Review this with management and operating personnel.
- 14. Jan 2016 14 DesigningDouble-Entry Systems 3 Finalize statements, chart of accounts, and other reports. 4 Prepare a plan of journalizing and design the necessary business papers and procedures to implement and operate the system.
- 15. Jan 2016 15 DesigningDouble-Entry Systems • The chart of accounts is a listing of all asset, liability, revenue, expense, and equity accounts used in an accounting system. • It is used to achieve an organization’s objectives for financial reporting and control.
- 16. Jan 2016 16 DesigningDouble-Entry Systems • A plan for journalizing and posting transactions involves several steps. • Step 1: Analyze the natures of activities within the four basic transaction cycles. 1 Revenue cycle 2 Expenditure cycle 3 Finance cycle 4 Production cycle
- 17. Jan 2016 17 DesigningDouble-Entry Systems • It is common to identify a fifth major transaction cycle to group accounts that are not directly affected by transactional activity. • The financial reporting cycle does not process transactions involving external parties.
- 18. Jan 2016 18 DesigningDouble-Entry Systems • Step 2: Group activities within each major transaction cycle into application systems. • An application system processes a logically related set of transactions. • Step 3: Develop a complete set of standard or recurring journal entries.
- 19. Jan 2016 19 DesigningDouble-Entry Systems • What are standard journal entries? • They are pro forma or hypothetical entries that are expected to occur in the normal operation of the system. • They should indicate three items. 1 The accounts affected by the entry 2 The source of the entry 3 The date or period of the entry
- 20. Jan 2016 20 DesigningDouble-Entry Systems Journal and Journal-Entry Relationship Sales Journal Page 1 Debits Credits Accounts Receivable Sales Date Reference Customers Other Class 1 Class 2 Services Tax Number 120 121 511 512 520 550 Standard Journal Entry No. 15 Monthly DR. 120 Accounts Receivable–Customers DR. 121 Accounts Receivable–Others CR. 511 Sales–Class 1 CR. 512 Sales–Class 2 CR. 520 Sales–Services CR. 550 Sales–Tax
- 21. Jan 2016 21 DesigningDouble-Entry Systems • The flow of processing in a manual accounting system is from source documents to journals, journals to ledgers, and from ledgers to financial statements. • Multiple transaction techniques become essential as the volume of transactions grows.
- 22. Jan 2016 22 DesigningDouble-Entry Systems • What is a one-write system? • It is a device that both posts a transaction and journalizes it in the same operation. • A writing board is designed to allow simultaneous recording on several documents arranged and held on a special board.
- 23. Jan 2016 23 DesigningDouble-Entry Systems • What is ledgerless bookkeeping? • It is a form of processing in which source documents are sorted and filed rather than posted to ledgers. • The file of source documents replaces a separate ledger.
- 24. Jan 2016 24 DesigningDouble-Entry Systems • Accounts receivable and accounts payable systems are typically best suited for ledgerless bookkeeping applications. • Ledgerless bookkeeping systems have less redundancy, and therefore less inherent control.
- 25. Jan 2016 25 DesigningDouble-Entry Systems • When computers are used to process transactions, two different modes of processing accounting transactions are possible. 1 Batch processing 2 Direct processing
- 26. Jan 2016 26 DesigningDouble-Entry Systems • Batch processing is a form of processing in which batches of transactions are accumulated and processed as a group. • Direct processing is a form of processing in which individual transactions are processed separately.
- 27. Jan 2016 27 DesigningDouble-Entry Systems • What is data validation? • It is the process of reviewing transaction details for accuracy and completeness during input.
- 28. Jan 2016 28 DesigningDouble-Entry Systems • The basic double-entry accounting model contains just three accounts: assets, liabilities, and equity. • Block coding is a way to organize a chart of accounts. • It sets aside a “block” or group of sequential account numbers for each major group of accounts.
- 29. Jan 2016 29 FormDesign and Records Retention Considerations • Accounting-related forms and papers serve several functions. • What are these functions? • They serve as a physical medium to store and transmit data. • They transmit authority and responsibility. • They assist employees by indicating what data should be recorded.
- 30. Jan 2016 30 FormDesign and Records Retention Considerations • The fundamental consideration in form design is the user. • Concerning paper forms, optional design features such as multiple colors, prenumbering, and rigid specifications for size and quality of the paper stock are often desirable.
- 31. Jan 2016 31 FormDesign and Records Retention Considerations • Records retention requirements must be considered in the design of an accounting system. • Various government and tax regulations set specific guidelines and legal requirements over records retention.
- 32. Jan 2016 32 FormDesign and Records Retention Considerations • Records retention must also be considered from the internal viewpoint of information storage and usage.