Accounting Systems

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Accounting Systems
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Objective 1
Define an accounting system and describe its
implementation.
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Accounting Systems Growth Process
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Three Step Process as a Business Grows and Changes
Step 1 Analysis

• Identify the needs of those who use the
  businesss financial information.
• Determine how the system should provide this
  information.

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Step 2 Design

• The system is designed so that it meets the
  users needs.

Step 3 Implementation

• The system is implemented and used.

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Feedback
Once a system has been implemented, feedback, or
input from the users of the information can be
used to analyze and improve the system.
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Internal Controls
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.
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Processing Methods
Processing methods are the means by which the
system collects, summarizes, and reports
accounting information. These methods may be
either manual or computerized.
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Objective 2
Journalize and post transactions in a manual
accounting system that uses subsidiary ledgers
and special journals.
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A large number of individual accounts with a
common characteristic can be grouped together in
a separate ledger called a subsidiary ledger.
The primary ledger, which contains all of the
balance sheet and income statement accounts, is
called a general ledger.
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Each subsidiary ledger is represented in the
general ledger by a summarizing account, called a
controlling account.
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The individual customers accounts are arranged
in alphabetical order in a subsidiary ledger
called the accounts receivable subsidiary ledger
or customers ledger.
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The individual creditors accounts are arranged
in alphabetical order in a subsidiary ledger
called the accounts payable subsidiary ledger, or
creditors ledger.
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General Ledger and Subsidiary Ledgers
General Ledger
Cash 11
Accts. Rec. 12
Supplies 14
Accts. Pay. 21
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Special Journals
SELLING
Providing services on account
Receipt of cash from any source
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Special Journals
Purchase of items on account
Payment of cash for any purpose
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Special Journals
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.
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The revenue journal is used for recording fees
earned on account. Cash fees earned would be
recorded in the cash receipts journal.
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Posting the Revenue Journal
6 616 RapZone 1 7 5 0 00 18 617 Web
Cantina 2 6 5 0 00 27 618 Accessories by
Claire 3 0 0 0 00
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6 616 RapZone 1 7 5 0 00 18 617 Web
Cantina 2 6 5 0 00 27 618 Accessories by
Claire 3 0 0 0 00
Accounts Receivable Subsidiary Ledger
Accessories by Claire
Date Item P.R. Debit Credit Balance

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Exhibit 2 Revenue Journal
6 616 RapZone 1 7 5 0 00 18 617 Web
Cantina 2 6 5 0 00 27 618 Accessories by
Claire 3 0 0 0 00
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The debit total is posted from the revenue
journal to Accounts Receivable in the general
ledger.
Accounts Receivable
ACCOUNT
Account No. 12
Balance
Post. Ref.
Dr.
Cr.
Date
Item
Cr.
Dr.
2008
Mar. 1 Balance 3 400 00
31
9 600 00
13 000 00
R35
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6 616 RapZone 1 7 5 0 00 18 617 Web
Cantina 2 6 5 0 00 27 618 Accessories by
Claire 3 0 0 0 00
(12)
Indicates a debit posting of 9,600 to
Accounts Receivable (General Ledger Account 12)
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The credit total is posted from the revenue
journal to Fees Earned in the general ledger.
Fees Earned
ACCOUNT
Account No. 41
Balance
Post. Ref.
Dr.
Cr.
Date
Item
Cr.
Dr.
2008
Mar. 31
9 600 00
R35
9 600 00
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6 616 RapZone 1 7 5 0 00 18 617 Web
Cantina 2 6 5 0 00 27 618 Accessories by
Claire 3 0 0 0 00
(41)
(12)
Indicates a credit posting of 9,600 to Fees
Earned (General Ledger Account 41)
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Cash Receipts Journal
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.
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Cash Receipts Journal and Postings
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GENERAL LEDGER
ACCOUNT Rent Revenue Acct. No.
42
Date Item P.R. Debit Credit Cr. Bal.
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CR14
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CASH RECEIPTS JOURNAL
Page 14
Other Accounts Post Accounts
Receivable Cash Date Account Credited
Ref. Cr. Cr. Dr.
2008
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Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 Accessories by Claire 2,200 2,200
30 RapZone 1,750 1,750
Accounts Receivable Subsidiary Ledger
Web Cantina
Date Item P.R. Debit Credit Balance

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CR14
3,400
2,650
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After all journalizing and posting for the month
to individual accounts is complete, the columns
are totaled.
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Posted Cash Receipts Journal
CASH RECEIPTS JOURNAL
Page 14
Other Accounts Post Accounts
Receivable Cash Date Account Credited
Ref. Cr. Cr. Dr.
2008
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Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 Accessories by Claire 2,200 2,200
30 RapZone 1,750 1,750
400 7,350 7,750
( )
(12)
(11)
A checkmark indicates that the items in this
column are posted individually.
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After posting, the total amount of the accounts
in the accounts receivable subsidiary ledger
should match the balance in the general ledgers
Accounts Receivable account.
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Accounts Receivable(Controlling)
Balance, March 1, 2008 3,400 Total debits (from
revenue journal) 9,600 Total credits (from cash
receipts journal) (7,350) Balance, March 31,
2008 5,650
NetSolutions Customer Balance Summary Report,
March 31, 2008
Accessories By Claire 3,000 RapZone 0 Web
Cantina 2,650 Total accounts receivable 5,650
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The purchases journal is designed for recording
all purchases on account.
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Journalizing in the Purchases Journal
PURCHASES JOURNAL
Page 11
Accts. Other Post Payable Supplies Accounts
Post Date Account Credited Ref. Cr. Dr. Dr. Ref. A
mount
7 Donnelly Supplies 420 420 12 Jewett
Business Sys. 2,800 Off. Equip. 2,800 19 Donnel
ly Supplies 1,450 1,450 27 Howard
Supplies 960 960
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Note that the March 12 purchase of office
equipment for 2,800 is recorded as a debit in
the Other Accounts Dr. column. Also note that
the account title is written in for proper
posting.
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PURCHASES JOURNAL
Page 11
Accts. Other Post Payable Supplies Accounts
Post Date Account Credited Ref. Cr. Dr. Dr. Ref. A
mount
7 Donnelly Supplies 420 420 12 Jewett
Business Sys. 2,800 Off. Equip. 2,800 19 Donnel
ly Supplies 1,450 1,450 27 Howard
Supplies 960 960
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Posting the Purchases Journal
PURCHASES JOURNAL
Page 11
Accts. Other Post Payable Supplies Accounts
Post Date Account Credited Ref. Cr. Dr. Dr. Ref. A
mount
Accounts Payable Subsidiary Ledger
Howard Supplies
Date Item P.R. Dr. Cr. Balance

P11
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PURCHASES JOURNAL
Page 11
Accts. Other Post Payable Supplies Accounts
Post Date Account Credited Ref. Cr. Dr. Dr. Ref. A
mount
Office Equipment (Account 18 in the general
ledger) is debited for 2,800.
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At the end of March, all columns are totaled and
equality of debits and credits is verified. Then
the total amount in the Accounts Payable Cr.
and Supplies Dr. columns are posted. Because
Office Equipment was posted earlier, the 2,800
total is not posted.
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7 Donnelly Supplies 420 420 12 Jewett
Business Sys. 2,800 Off. Equip. 18 2,800 19 Donn
elly Supplies 1,450 1,450 27 Howard
Supplies 960 960 31 6,230 3,430 2,800 (
) ( ) ( )
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GENERAL LEDGER
ACCOUNT Accounts Payable No. 21
Date Item P.R. Debit Credit Balance
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2008
Mar. 1 Bal 1,230
6,230
7,460
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P11
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Accts. Other Post Payable
Supplies Accounts Post Date Account
Credited Ref. Cr. Dr. Dr. Ref. Amount
7 Donnelly Supplies 420 420 12 Jewett
Business Sys. 2,800 Off. Equip. 18 2,800 19 Donn
elly Supplies 1,450 1,450 27 Howard
Supplies 960 960 31 6,230 3,430 2,800 (
) ( ) ( )
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GENERAL LEDGER
ACCOUNT Supplies
No. 14
Date Item P.R. Debit Credit Balance
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2008
Mar. 1 Bal 2,500
3,430
5,930
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P11
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Cash Payments Journal
All transactions involving a credit to Cash are
recorded in the cash payments journal.
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?
15 151 Grayco Supplies 1,230 1,230
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
Journalize the remainder of Marchs cash
disbursements.
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?
?
15 151 Grayco Supplies 1,230 1,230
15 151 Grayco Supplies 1,230 1,230
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
Journalized the remainder of Marchs cash
disbursements.
Post to individual creditors accounts.
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15 151 Grayco Supplies 1,230 1,230
15 151 Grayco Supplies 1,230 1,230
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
The journal is ruled, summed, and verified for
equality of debits and the Cash Cr. column.
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15 151 Grayco Supplies 1,230 1,230
15 151 Grayco Supplies 1,230 1,230
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
21 152 Jewett Business Sys. 2,800 2,800 22 153
Donnelly Supplies 420 420 30 154 Utilities
Expense 1,050 1,050 31 155 Howard
Supplies 600 600
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Items in the Other Accounts Dr. column are
posted. Then the totals for Accounts Payable
Dr. and Cash Cr. are posted.
(21)
(11)
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Accounts Payable Control and Subsidiary Ledger
Accounts Payable (Control)
Balance, March 1, 2008 1,230 Total credits (from
purchases journal) 6,230 Total debits (from cash
payments journal) (5,050) Balance, March 31,
2008 2,410
NetSolutions Supplier Balance Summary
Report March 31, 2008
Donnelly Supplies 1,450 Grayco Supplies 0 Howard
Supplies 960 Jewett Business Systems
0 Total 2,410
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Objective 3
Describe and give examples of additional
subsidiary ledgers and modified special journals.
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Modified Special Journals
A business may modify its special journals by
adding one or more columns for recording
transactions that occur frequently.
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Modified Revenue Journal
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Objective 4
Apply computerized accounting to the revenue and
collection cycle.
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At any time, managers may request reports from
the software.

• The customer balance summary.
• The fees earned by customer detail.
• The cash receipts.