ACCOUNTING INFORMATION SYSTEM

WEEK 11
HOW DOES A COMPANY COPE WITH HEAVY THE 3 STAGES OF DATA PROCESSING:
TRANSACTION LOAD? 1. Inputs are data from source documents such as
sales invoices, official receipts, and purchase
SPECIALIZATION - Grouping of transactions to facilitate invoices among others.
ease of processing. 2. Processing includes journalizing transactions,
COMPUTERIZATION - Use of computers to speed up the posting to the accounts and preparing the financial
process and make it more reliable. statements.
3. Outputs are the reports generated by the system
A combination of personnel, records and procedures to needed for decision making. They include but are
generate financial data. not limited to financial statements.
1. Presence of Internal Control Internal - control The design of an accounting system starts with a chart of
refers to methods and procedures installed by accounts.
management to safeguard assets and ensure
accurate and reliable accounting records. A chart of accounts is a list of all account titles and
2. Compatibility - The system works smoothly with the account numbers used by a company. The account
company’s operations, personnel and organizational number classifies each account whether it is an asset,
structure. liability, equity, income or expense account.
3. Flexibility - The system can adjust to changes in the
company’s operations without need of a complete
overhaul. These changes occur when a company SPECIAL JOURNALS:
develops new products, sells unprofitable segments (other transactions that doesn’t fit here is included in GENERAL JOURNAL)
and acquire new ones.
4. Favorable cost benefit relationship - The benefits Sales Journals – Sales of Merchandise on account
of providing timely and reliable information should Source Docs: Sales Invoice
outweigh the costs.
Cash Receipts Journals – Transactions involving receipts
HARDWARE - Consists of electronic equipment such as of Cash
computer terminals, monitors, servers, printers, hard Source Docs: Official Receipts
disks, etc.

SOFTWARE - Refers to the computer program/s Purchase Journals – Purchase of Merchandise & other
installed in the computer that allows it to accept, items on account.
process and print data needed by management Source Docs: Purchase Invoice

PERSONNEL – The process owners, navigators, Cash Disbursements Journals – Transactions involving
processor of a computerized system. payments of cash
Source Docs: Check Vouchers & Checks
How does it work in a Computerized system?

Input – We identify and record financial transactions. General Journal – Transactions that do not fit in the 4
special journals.
Process – Financial transactions are processed and
- Sales returns and allowances
summarized by an accounting system.
- Purchase returns and allowances
Output – Financial reports are generated for users to - Adjustments
decide on specific course of action. - Closing Entries
Computerized accounting systems are menu driven. Sample Questions:
Tasks and functions are listed and accessed using the
menu. List Price: 200,000
Trade Discount: 20%, 10%
The computerized accounting system does away with Credit Terms: 3/10, 2/15, n/30
some of the procedures in the manual accounting system Trade discount will amount to: 56,000
such as posting, trial balance preparation, or Solution:
constructing a worksheet. 200,00 x .20 = 160,000 x .10 = 16,000
40,000 + 16,000 = 56,000
Computerized accounting system makes use of modules.
Modules are separate but integrated units that are
compatible and can function together. A transaction may Trade Discount – An amount deducted from the
affect one or more modules. For example, when sales catalogue price (list price) for an item of merchandise.
data are encoded, both the sales module and accounts
receivable module are affected. Customer Discount, Sales Discount, and Purchase
Discount are all the same, they’re Cash Discount when
A spreadsheet is an electronic worksheet that link data applied.
by formulas and functions. (ie. Microsoft Excel)

A network is a system of electronic linkages that allows

different computers to share the same information. Which of the following statements is false:

Control Accounts – accounts appearing in the general Cost of good sold + ending inventory = cost of goods
ledger. available for sale

Subsidiary Accounts – is a detailed listing of a control Purchases – purchase discount - purchase returns and
account. allowances = net purchases

Example 1: Cost of goods available for sale - cost of good sold =

ending inventory
Control Account – Accounts Receivable
Cost of goods available for sale + freight in – net
Subsidiary Ledger – Customers’ accounts purchases = beginning inventory
Example 2:

Control Account – Accounts Payable List Price: 200,000

Trade Discount: 20%, 10%
Subsidiary Ledger – Suppliers’ accounts
Credit Terms: 3/10, 2/15, n/30

Cash payment on the 12th day from the date of

purchase is: 141,120

200,000 x .80 = 160,000 x .90 = 144,000

(Invoice price = 144,000)

144,000 x .98 = 141,120

Under the perpetual inventory system, in addition to

making the entry record a sales return, a company
would:

• Debit merchandise inventory and credit COGS

Under the perpetual inventory system, in addition to
making the entry to record a sale, a company would:

• Debit COGS and credit merchandise inventory

Gross margin equals the difference between net sales

and Cost of Goods Sold.

Net Sales less gross profit is equal to: COGS

List Price: 200,000

Trade Discount: 20%, 10%
Credit Terms: 3/10, 2/15, n/30
Invoice Price would be: 144,000

200,000 x .80 = 160,000 x .90 = 144,000

Gross Profit

Gross profit (gross profit, gross margin, or sales profit) is

simply “Net Sales minus COGS”.

Net Sales 5,000

Less: COGS 3,000
Gross Profit = 2,000
Rent Expense 100
Dept Exp 100
Salaries Exp 100
Sales (Net Profit) = 1,700

Net Sales is total sales minus sales returns and

discounts.

Sales: 5,000
Less: Sales Returns: 1,000
Less: Sales Discount: 1,000
Net Sales: 3,000

Sales Returns and Sales discounts are contra account

(deductions) to Sales when computing for Net sales.

Operating cycle – Kung gaano katagal yung period

simula nilabas mo yung pera hanggang bumalik.

Goods amounting 20,000 were purchased on terms

2/10, n/30. Subsequently, goods costing 1,200 were
returned before payment was made within the discount
period. The entry to record a payment will be:

Credit 18,424

Solution: 20,000 – 1,200 = 18,800 x .98 = 18,424

Trade Discount – not recorded in the accounts.