Accounting Chapter 5
Terms in this set (14)
Differences Between Manual and Computerized Accounting
1) Computerized systems simplify the record keeping process in that transactions are recorded in electronic forms and at the same time, posted electronically to general and subsidiary ledger accounts.
2) Computerized systems are generally more accurate than manual systems
3) Computerized systems provide management with current account balance information to support the decision making, since account balances are posted as the transactions occur.
Phases of Setting up an Accounting System
1)Analyze the user information needs
2) Design the system to meet the user needs
3) Implement the system
our ANALYSIS determined that Chris Clark needed financial statements for the new business. We DESIGNED the system using a basic manual system that included a chart of accounts etc. Finally we IMPLEMENTED the system to record the transactions and prepare financial statements
A large number of individual accounts with a common characteristic can be grouped together. (accounts payable or accounts receivable) A secondary ledger that supports a controlling account in a general ledger.
The primary ledger which contains all of the balance sheet and income statement accounts.
Each subsidiary ledger is represented in the general ledger by a summarizing account. The sum of the balances of the accounts in a subsidiary ledger must equal the balance of the related controlling account.
Accounts Receivable subsidiary ledger (Customer ledger)
lists the individual customer accounts in alphabetical order. The controlling account in the general ledger that summarizes the debits and credits tot the individual customer accounts in Accounts receivable.
Accounts Payable Subsidiary Ledger (Creditors Ledger)
lists individual creditor accounts in alphabetical order. The related controlling account in the general ledger is Accounts payable.
Each special journal is designed to be used for recording a single kind of transaction that occurs frequently. Ex: a special journal for recording cash payments, and another for cash reciepts.
Fees earned on account by all companies from least to most earned. see page 205-207
Cash Receipts Journal
All transactions that involve receipts of cash are recorded here.
see page 208
Accounts Receivable Control Account and Subsidiary Ledger.
Used to compare the balances of the accounts recievable controlling account in the general ledger with teh accounts receivable in the subsidiary ledger.
All purchases on account are recorded here. Not cash payments.
Cash Payments Journal
all transactions that involve the payment of cash are recorded here.
Accounts Payable Control Account and Subsidiary Ledger
At the end of the month the balances in the accounts payable subsidiary ledger should be totaled and then compared with the balance of the accounts payable controlling account in the general ledger. They should =