Ch. 2 Transaction Processing in the AIS 高立翰
OUTLINE Accounting and bookkeeping Accounting cycle Internal controls Coding systems Human judgment and information technology
Learning objectives 1. Differentiate accounting and bookkeeping. 2. List, discuss and complete, in order, the steps in the accounting cycle. 3. Identify common internal controls associated with the accounting cycle. 4. Describe common coding systems and how they are used in the AIS. 5. Explain how human judgment and information technology affect the accounting cycle.
Accounting and bookkeeping Accounting Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information. Bookkeeping The part of accounting associated with identifying and measuring economic information.
Identifying and measuring Identifying Recognizing events that give rise to journal entries vs. those that do not Measuring Historical cost, such as supplies Present value, such as long-term bonds payable Market value, such as certain investments in marketable securities Net realizable value, such as accounts receivable
Accounting cycle (1/3) Ten steps used to gather data, process it and create general purpose financial statements Two groups Steps that occur throughout the fiscal year Steps that occur at the end of the fiscal year
Accounting cycle (2/3) Steps that occur throughout the fiscal year 1. Obtain information about external transactions from source documents. 2. Analyze transactions. 3. Record the transactions in a journal. 4. Post from the journal to the general ledger accounts. 5. Prepare an unadjusted trial balance.
Accounting cycle (3/3) Steps that occur at the end of the fiscal year 6. Record adjusting journal entries and post to the ledger accounts. 7. Prepare an adjusted trial balance. 8. Prepare financial statements. 9. Close the temporary accounts to retained earnings. 10. Prepare a post-closing trial balance. Some organizations prepare adjusting entries multiple times throughout the year, such as at the end of each quarter.
Two kinds of transactions External transactions Exchanges of goods and services with other individuals and business entities. Consumers Suppliers Shareholders Government agencies Employees Internal transactions Including adjusting entries, closing entries, and reversing entries.
Coding systems (1/2) Methods for identifying source documents for easier reference later Four broad types Sequential ( 連續編號法 ) Block ( 類級編號法 ) Hierarchical ( 階層式編號法 ) Mnemonic ( 名稱助記編號法 )
Examples in F/S
Coding systems (1/2) Sequential ( 連續編號法 ) Documents are numbered in sequence 缺點 : 缺乏彈性, 號碼本身無意義 Block ( 類級編號法 ) First digit specifies a group 缺點 : 較為複雜 Hierarchical ( 階層式編號法 ) Groups of digits have meaning 缺點 : 數字代碼意義需另造冊說明分類 Mnemonic ( 名稱記憶編號法 ) Code is a reminder of its meaning 適用材料或產品項目使用 E.g. CPA, Certified Public Accountant E.g. 80A4CP, 80p A4 Copy paper, department 03.514.101 geographic location account number
Human judgment & information technology Often incorporated in accounting information systems Information technology is not the system; it is a tool used in the system. Human judgment Determining which events lead to journal entries Information technology Spreadsheets, relational databases, general ledger software, ERP systems
Three ways of human judgement Designing source documents Provide plenty of space for filling in required data 來源憑證內容是否完整 Recognizing recordable transactions Market value of land may increase over time Estimating amounts and interpreting accounting rules Rule based vs. principle based