Accounting Information System

1
Accounting Information
System

1
Chapter
Dr. BALAMURUGAN MUTHURAMAN
2
The Accounting System A Conceptual Overview
Operating Environment
Business Entity A
Process and Summarize
System Outputs Financial Statements and Reports
System Inputs Measurable Transactions and Events
3
Financial Reporting Environment
4
Management Prepares
Independent Auditor
1
A
A
3
P
G
S
G
A
A
Lends Credibility
Basic Mistrust
2
4
5
International Accounting Principles

• Despite our growing global economy, countries
  continue to maintain their unique set of
  acceptable accounting practices.

6
Learning Objective

• Identify, explain, and apply accounting
  principles.

Conceptual
7
A business continues operation instead of being
closed or sold.
Financial Statement information is supported by
independent, unbiased evidence.
A business is accounted for separately from its
owner(s).
8
Express transactions and events in monetary units.
Financial statements are based on actual costs
incurred in business transactions.
9
Accounting Information
System

• Text Section
  Transactions, Documents, and Accounts (p. 41)

10
Learning Objective

• Identify, explain, and apply accounting
  principles.

Conceptual
11
The Accounting Process
Exh. 2.2
12
Transactions and Events

• Exchanges of economic consideration between two
  parties.

13
Accounting Information System
Ongoing events in world
Recording
14
Learning Objective
C4

• Describe source documents and their purpose.

Conceptual
15
Source Documents
16
Learning Objective

• Describe an account and its uses in recording
  transactions.

Conceptual
17
Account

• A storage unit used to classify and summarize
  money measurements of business activity of a
  similar nature.

18
The Account
Detailed record of increases and decreases in
specific assets, liabilities, equities, revenues,
or expenses. Separate
accounts are maintained for each item of
importance.
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For Sole Proprietorships and Partnerships
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For Corporations
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The General Ledger
General Ledger
A

SE

L
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T Accounts
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Account Title
Right Side
Left Side
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The Formal Account
The Balance Column Ledger
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The Formal Account
Account Title Account Title Account Title Account Title Account Title Account No. Account No. Account No.
Date Date Item Post Ref Debit Credit Balance Balance
Date Date Item Post Ref Debit Credit Debit Credit




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Assets
Liabilities
Owners Equity


Capital Stock
Retained Earnings
The Accounting Equation A L OE
Expenses
Revenue
-
Net Income