ACFI1002 Lecture Notes - Lecture 6: Deferral, Enterprise Resource Planning, Subledger
29 Jun 2018
School
Department
Course
Professor
Accounting Information Systems
Topic 6
LO1: Four essential elements of an effective accounting information
system.
Control: methods and procedures used to authorise transactions and safeguard assets.
Compatibility: system works smoothly with business ops, personnel and org structure.
Flexibility: accommodates changes without complete overhaul.
Cost-benefit relationship: indicates cost of controls don’t exceed value to organisation.
LO2: Describe key elements of computerised and manual accounting
systems and explain how they work.
Components of a computerised accounting system:
Hardware and software make up heart of computerised accounting system.
Hardware includes computers, monitors, printers and network connecting them.
Software is set of programs used.
Most modern accounting systems require a network, the system of electronic linkages that
allows different computers to share same information.
For large enterprises, accounting software integrated within overall business database, or
computerised storehouse of information, such as an enterprise resource planning (ERP)
system.
How they work:
Inputs represent data from source documents, such as sales, receipts, bank deposit slips and
fax orders and other telecommunications. Inputs usually grouped by type.
In manual system, processing includes journalising transactions, posting to the accounts and
preparing financial statements. A computerised system automates this process.
Outputs are the reports used for decision making, including the financial statements.
An accounting system begins with a chart of accounts, which lists all accounts and their
number in the ledger.
Computer systems organised by function or task.
Computerised accounting systems rely on account number ranges to translate accounts and
their balances into properly organised financial statements and other reports.
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Computer systems usually have a choice of processing options on a menu.
MYOB is an example of an accounting software.
LO3: Describe how spreadsheets are used in accounting.
ERP systems and MYOB are organised by modules, separate but integrated units that are compatible
ad that function together. Changes that affect one module affect the others. For example, entering
and posting a credit-sale transaction will update two modules: AR/Sales and Inventory/COS.
Preparing worksheets are time consuming, tedious and expensive- errors are also more likely.
Spreadsheets are computer programs that can be used to process accounting data in very small
organisations but are generally used to support the analysis of accounting data. They link data by
means of formulas and functions and were originally invented to update budgets. Spreadsheets are
organised as a rectangular grid composed of cells, each defined by a row number and column
number (ie excel A3- first column, third row). A cell can contain words (Labels), numbers or formulas.
The cursor, or electronic highlighter, indicates which cell is active and it can be moved around the
spreadsheet. When a cursor is placed over any cell, information can be entered there for processing.
The power of spreadsheets is apparent when large amount of data is analysed. Change only one
number and hours of manual calculatons are saved.
LO4, LO5, LO6: SPECIAL JOURNALS AND SUBSIDIARY LEDGERS
INTRODUCTION
SPECIAL JOURNALS:
Special journals are used to record one specific type of transaction. The types of special journals
used depend largely on the types of transactions that occur frequently in a business enterprise. For
example, the sales journal records all sales of inventory on credit, whilst the cash receipts journal
records all receipts of cash.
These journals are designed to:
Streamline the accounting system by recording frequent transactions together.
Create more efficient recording of transactions.
Save time by recording each transaction on one line in the journal (no narration).
Reduction in amount of postings (posted as totals in ledger rather than individual entries).
Easier to retrieve information.
Permit greater division of labour: more than one user can update accounting system.
Procedures for posting in special journals:
Daily: any transaction which affects a subsidiary ledger is posted daily.
Monthly: at the end of the month, the special journals are totalled and those totals are
posted to the general ledger.
In a manual system, the special journals are as follows:
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SUBSIDIARY LEDGERS:
Subsidiary ledgers are groups of accounts with a common characteristic. For example, the following
general ledger accounts have subsidiary ledgers:
Debtors/ accounts receivable: a separate account for each customer.
Creditors/ accounts payable: a separate account for each supplier.
Property, plant and equipment: separate record for each non-current asset.
Inventory: separate record for each inventory item held.
Subsidiary ledgers have a number of benefits:
Remove a large amount of details information from the general ledger.
Provide up to date information about individual accounts.
Provide more timely and efficient processing of information.
Provide for segregation of duties.
Help locate errors in individual accounts.
The end of period reconciliation between total of subsidiary ledger accounts and the balance
of related account in general ledger helps ensure postings are correct.
LO4: Illustrate how to use the sales journal, the cash receipts journal
and the accounts receivable ledger.
Sales Journal:
Credit sales are entered into the sales journal. Each entry in the Accounts Receivable/ Sales Revenue
column of the sales journal is a debit to Accounts Receivable with credits to Sales Revenue and GST
Clearing.
For each transaction, enter date, invoice number, customer account and transaction amount.
Posting from the sales journal to the general ledger is usually done only once each month.
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find more resources at oneclass.com
Document Summary
Lo1: four essential elements of an effective accounting information system. Control: methods and procedures used to authorise transactions and safeguard assets. Compatibility: system works smoothly with business ops, personnel and org structure. Cost-benefit relationship: indicates cost of controls don"t exceed value to organisation. Lo2: describe key elements of computerised and manual accounting systems and explain how they work. Hardware and software make up heart of computerised accounting system. Hardware includes computers, monitors, printers and network connecting them. Most modern accounting systems require a network, the system of electronic linkages that allows different computers to share same information. For large enterprises, accounting software integrated within overall business database, or computerised storehouse of information, such as an enterprise resource planning (erp) system. Inputs represent data from source documents, such as sales, receipts, bank deposit slips and fax orders and other telecommunications. In manual system, processing includes journalising transactions, posting to the accounts and preparing financial statements.
