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AIS Ch 2

Transaction Processing

Humans v IT

Why is human judgement necc in AIS?

Estimation/interpretation

Accounting involves estimates in many areas, such as forecasting, risk and present value of cash flows. AI cannot make judgement calls on these inexact values, so humans must step in to provide the necessary info.

Recordable Trx?

Source docs

Coding

Methods and applications of coding?

Accounting

Accounting Cycle

Financial stmts

- Income Stmt

- Earnings Stmt

- Balance Sheet

- Stmt of Cash Flows

6 steps of Trx analysis

1. Identify affected accounts

2. Identify effect

3. FS element represented in Trx

4. Journal entries

5. Verify balance

6. Adjusting entries

The Accounting Equation

ASSETS = LIABILITIES + OWNERS' EQUITY

Bookkeeping v Accounting

While bookkeeping incorporates elements of accounting, it does not focus on the analysis or communication of the collected information for/to interested parties.