Transaction Processing in the AIS
Accounting and Bookkeeping
are Interconnected
Accounting
Bookkeeping, plus communicating that information to permit informed judments and decisions by users of the information
Bookkeeping
Identifying and measuring economic information
The Accounting Cycle Overview
1. Obtain information about external
transactions from source documents
BEGINNING!!!
2. Analyze Transactions
3. Record the transactions in a journal
4. Post from the journal to
the general ledger acocunts
5. Prepare an unadjusted trial balance
6. Record adusting entries
and post to the general ledger
8. Prepare financial statements
Income Statement
Statement of Changes
in shareholder's equity
Statement of Cash Flows
Balance Sheet
7. Prepare an adjusted trial balance
9. Close the temporary accounts
to retained earnings
10. Prepare a post closing trial balance
END OF YEAR!!! Then Start Over at 1!!!
Judgment and Information Technology impact Accounting Cycle
Information Technology
Recording Transactions
Preparing trial balances and financial statements
Human Judgment
Designing Source Documents
Recognizing recordable transactions
Estimating amounts and
interpreting accountings rules
Chart of Accounts Coding System
Sequential Coding
Block Coding
Mnemonic Codes
Hiearchial Codes
Internal Controls within Accounting Cycle
Sequential Numbering
Physical Security
Transaction Limits