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54 Cards in this Set

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  • Back

Approving credit for returned merchandise is an example of:


a. a financial transaction


b. non-financial transaction

b. non-financial transaction

Horizontal information flows

>more details, operations-oriented information

Vertical information flows

>more summarized and condensed information


-downward flows include instructions, quotas, and budgets


-upward flows include aggregated information and operations data

Financial Transaction

>Tracked by AIS


>definition: an economic event that:


-affects the assets & equities of an organization


-is reflected in its accounts


-is measured in monetary terms

AIS Subsystems

>Transaction Processing System (TPS) - 3 cycles: revenue, expenditure, conversion


>General Ledger/Financial Reporting System (GL/FRS): summarizes data from the TPS to update general ledger accounts; create reports that are for both internal and external users


>Management Reporting Systems (MRS): take and summarizes data in the TPS and GL/FRS to create reports for internal users

In the SUA project, how would one find out how much is owed to a specific vendor?

This can be found in the account payable subsidiary ledger

Record Layouts

>conceptually illustrates how data is stored


>note that a record layout representation does not necessarily indicate how the data is physically stored

Primary Key

>something that every file must have


>identifier


>definition: a data item that uniquely identifies each record within a file

A Significant problem with flat-file environments

>data redundancy


-individual data items are stored repeatedly sometimes with different titles


-storing the same data in more than one place in the system

What is the OS called in the database model?

>OS in the database model is called the Database management system (DBMS)

What does the DBMS do?

>holds logical structures


>controls access to database

Direct Data Redundancy

>hard-keying data that is already entered in another place in the system

Indirect Data Redundancy

>hard-keying data that can be derived from data already in the system. ex. a sum of all the purchases already recorded

XBRL

>classification scheme


>all publicly traded companies required to submit financial statements to SEC in this format


>stands for eXtensible Business Reporting Language


>an internet formatting standard for the dissemination of financial information


>facilitates publication, exchange, and processing of information

What might the accounts receivable aged trial balance, such as the one prepared in the SUA, help to determine?

>helps to project the amount of noncollectable accounts

Should accountants serve as a filter?

It is not a question of if, but when. An accountant should serve as a filter but not until all data is entered. So, the accountant should filter at the output stage. The accountant can select from the information what they need. Filtering early can cause important information to be left out. If filtering is done at the output stage, no information is left out.

Types of processing used in computer accounting systems

>Batch


>Real-time


-online processing (OLP): master file is updated after each transaction

The development of modern accounting

>attributed to Luca Pacioli, in late 1400s
>oriented toward maintaining equality of algebraic model: assets = liabilities + owner's equity
>Pacioli's system was based upon a chart of accounts and a double entry system of recording the results of transactions
>every transaction would be recorded as affecting two economic elements

Source Documents

created at beginning of the transaction to capture data

Product Documents

the results of transaction processing


-ex. invoices, paychecks

Turnaround Documents

product documents that become source documents for another system


-ex. remittance advice

Journals

>records of chronological entry


>in a manual system each transaction requires a separate journal entry

Special Journals

>record similar transactions


-periodic posting to GL and subsidiary ledgers is required from special journals


-common special journals: sales, purchasing, cash receipts, cash disbursements.

General Journal

>records nonrecurring, infrequent, and dissimilar transactions


-in chronological order

Ledgers

show the account balances, or the financial effects of the transactions on the related accounts

General Ledger

contains the totals of all account activity


-beginning balance, current activity, and ending balances


-control accounts for subsidiary ledger totals

Subsidiary Ledger

groups similar individual accounts


-sales has no subsidiary ledger

Audit Trail

>a "trace" of a transaction from its initiation through to the financial statements


>important for 2 reasons:


1. assists in correcting errors


2. allows auditors and others to verify that a particular transaction was recorded correctly, and is accurately reflected on the financial statements

In a Manual System, the audit trail defined

>the sequential numbering of source documents


>the associated posting references that accompany the recording and processing of data to the journals and ledger accounts


**you should be able to trace the audit trail in both directions

Master Files


contain account data that are updated from transaction data


-ledgers

Transaction Files

hold records from events that will change master files


-journals

Reference Files

hold the transaction processing or rules: venders, prices

Archive Files

are historical files of past journals and ledgers

Batch Processing

>the master file data is updated long after the events take place from data stored in a transaction file


>a group of similar transactions are accumulated over time and then processed together

Real-time processing

>update happens at the same time the even is taking place


>transactions are processed individually as the event occurs

key observations that can be made with respect to the data contained on each of the following components of a traditional AIS:


-source document


-journal


-subsidiary ledger


-ledger


-financial statements

1. there is a loss of data going from source documents to financial statements


2. information becomes aggregated, difficult to dis-aggregate


3. there is data redundancy, both direct and indirect


4. if all source documents were stored in database, financial statements and reports could be made, eliminating data redundancy


5. (an example of this)

5 Basic Criticisms of the Traditional debit/credit-journal/ledger accounting system architecture

1. only captures data about a subset of an organization's transactions


2. stores and processes only a limited number or characteristics about financial transactions


3. data are not recorded and processed in real time, as the business activity or event occurs


4. captures and stores duplicate data in a highly summarized form


5. stores financial data to satisfy one primary view

What is the 3 way match?

-receiving report (what was received)
-purchase order (what was ordered)
-invoice (what was billed)

Purpose of purchase order

place order for goods from vendor

Sales Department

>where the sales process begins
>sales dept. clerk manually records the essential details on a sales order
>revenue cycle

Credit Approval Department

>organizationally and physically segregated from sales dept to provide independence to the authorization process


>credit dept. clerk verifies customer's creditworthiness


>revenue cycle

Warehouse

>warehouse clerk receives stock release copy of sales order, uses this to locate inventory


>revenue cycle

Shipping Department

>shipping clerk reconciles products received from warehouse with the shipping notice copy of the sales order


>prepares bill of lading if order is correct, then products are packaged and shipped


>revenue cycle

Billing Department

>upon receipt of shipping notice and stock release, the billing clerk uses the dept.'s PC, bills customer


>billing clerk then enters the transaction into the sales journal file and distributes the stock release and ledger copies of the sales order to the inventory control and AR dept.s


>revenue cycle

Shipping Notice

>evidence that the customer's order was filled and shipped


>provides proof that the product has been shipped, and is the trigger document that initiates the billing process

>sent to sales dept. where it is filed in the customer order file to reflect the order's shipped status
>revenue cycle

Receiving Department

>where sales return process begins


>receiving clerk manually prepares return slip which is sent to the sales dept.


>revenue cycle

Mail Room


>where customer payments and remit advices are received


>clerk opens mail, reconciles the checks and remit advices, endorses the checks, gathers remit advices and checks into batches, and prepares remit list


>clerk sends checks and copy of remit list to cash receipts dept. clerk


>remit advices and copy of remit list sent to AR dept.


>revenue cycle

Cash Receipts Department

>cashier records checks in cash receipts journal and deposits them at the bank


>employee periodically prepares journal voucher and sends it to general ledger dept.


>revenue cycle

Accounts Receivable Department

>uses remit advices to update customer balances in subsidiary ledgers


>clerk prepares a summary of changes to account balances, which is sent to the general ledger department


>revenue cycle

General Ledger Department

>upon receipt of journal voucher and account summary from cash receipts and AR, the GL clerk reconciles the information to the control accounts


>revenue cycle

Controller's Office

>periodically performs bank reconciliation by comparing deposit slips returned from the bank, account summaries used to post to the accounts, and journal vouchers


>revenue cycle

Bill of Lading

a formal contract between the seller and the shipping company to transport the goods to the customer

Receiving Report

>

In the SUA, when goods were returned, what document was filled out?

credit memo