Hello my friend

I need your help again

This is a short Discussion 100-150 words Max

Creating an Accounting Information System

You are the CEO of a newly incorporated retail firm that will sell DKNY and Tommy Hilfiger along with other designer clothing. Your job is to set up an accounting information system to maintain appropriate records needed in the eventual preparation of financial statements. Certain principles should be followed in the development of an accounting information system. Identify and explain each of the principles.

7-1 7 Accounting Information Systems Learning Objectives 1 2 Describe the nature and purpose of a subsidiary ledger. 3 7-2 Explain the basic concepts of an accounting information system. Record transactions in special journals. LEARNING OBJECTIVE 1 Explain the basic concepts of an accounting information system. Accounting information system (AIS) collects and processes transaction data and communicates financial information to decision makers. Includes: Documents that provide evidence of transactions. 7-3 All steps in the accounting cycle. Manual or computerized accounting system. LO 1 Basic Concepts of AIS Cost Effectiveness - Benefits must outweigh the costs. Illustration 7-1 Principles of an efficient and effective accounting information system. Useful Output Flexibility - The system should be sufficiently flexible to meet the resulting changes in the demands made upon it. 7-4 LO 1 Computerized Accounting Systems Software programs (functions include sales, purchases, receivables, payables, cash receipts and disbursements, and payroll). Generate financial statements. Advantages: Many human errors are eliminated. 7-5 Typically enter data only once. More timely information. LO 1 Computerized Accounting Systems CHOOSING A SOFTWARE PACKAGE ENTRY-LEVEL SOFTWARE Internal control Customization 7-6 Audit trail Easy data access and report preparation Network Compatibility ENTERPRISE RESOURCE PLANNING SYSTEMS LO 1 Ethics Insight Curbing Fraudulent Activity with Software The Sarbanes-Oxley Act (SOX) requires that companies demonstrate that they have adequate controls in place to detect significant fraudulent behavior by employees. The SOX requirements have created a huge market for software that can monitor and trace every recorded transaction and adjusting entry. This enables companies to pinpoint who used the accounting system and when they used it. These systems also require \"electronic signatures\" by employees for all significant transactions. Such signatures verify that employees have followed all required procedures, and that all actions are properly authorized. One firm that specializes in compliance software had 10 clients prior to SOX and 250 after SOX. Note that small businesses have no standards like SOX and often do not have the resources to implement a fraud-prevention system. As a result, small businesses lose nearly $630 billion to fraud each year. To address this problem, more sophisticated software is being designed for small business fraud prevention. Sources: W. M. Bulkeley and C. Forelle, \"Anti-Crime Program: How Corporate Scandals Gave Tech Firms a New Business Line,\" Wall Street Journal (December 9, 2005), p. A1; and \"New Software Fights Small Business Fraud,\" FOX Business (August 9, 2013). Why might this software help reduce fraudulent activity by employees? (Go to WileyPLUS for this answer and additional questions.) 7-7 LO 1 Manual Accounting Systems Perform each step in the accounting cycle by hand. Satisfactory with a low volume of transactions. Must understand manual accounting systems to understand computerized accounting systems. 7-8 LO 1 DO IT! 1 Basic AIS Concepts Indicate whether the following statements are true or false. 1. An accounting information system collects and processes transaction data and communicates financial information to decision-makers. 2. A company typically enters data only once in a manual accounting system. False 3. Enterprise resource planning (ERP) systems are typically used by companies with revenues of less than $5 million and up to 20 employees. 7-9 True False LO 1 LEARNING OBJECTIVE 2 Describe the nature and purpose of a subsidiary ledger. Used to keep track of individual balances. Two common subsidiary ledgers are: 1. Accounts receivable (customers') 2. Accounts payable (creditors') 7-10 Illustration 7-2 Relationship of general ledger and subsidiary ledgers LO 2 Subsidiary Ledger Example 7-11 Illustration 7-4 Relationship of general and subsidiary ledgers LO 2 Advantages of Subsidiary Ledgers 1. Show in a single account transactions affecting one customer or one creditor. 2. Free the general ledger of excessive details. 3. Help locate errors in individual accounts. 4. Make possible a division of labor. 7-12 LO 2 Accounting Across the Organization \"I'm John Smith, a.k.a. 13695071642\" Rather than relying on customer or creditor names in a subsidiary ledger, a computerized system expands the account number of the control account in a prespecified manner. For example, if the control account Accounts Receivable was numbered 10010, the first account in the accounts receivable subsidiary ledger might be numbered 10010- 0001. Most systems allow inquiries about specific accounts in the subsidiary ledger (by account number) or about the control account. With the latter, the system would automatically total all the subsidiary accounts whenever an inquiry to the control account was made. Why use numbers to identify names in a computerized system? (Go to WileyPLUS for this answer and additional questions.) 7-13 LO 2 DO IT! 2 Subsidiary Ledgers Presented is information related to Sims Co. for its first month of operations. Determine the balances in the accounts payable subsidiary ledger. What is the Accounts Payable balance in the general ledger at the end of January? 7-14 LO 2 LEARNING OBJECTIVE 3 Record transactions in special journals. Used to record similar types of transactions. Illustration 7-5 Use of special journals and the general journal If a transaction cannot be recorded in a special journal, the company records it in the general journal. 7-15 LO 3 Special Journals Question Each of the following is a subsidiary ledger except the: a. accounts receivable ledger. b. accounts payable ledger. c. customer's ledger. d. general ledger. 7-16 LO 3 Sales Journal JOURNALIZING CREDIT SALES Illustration 7-6 Journalizing the sales journalperpetual inventory system Perpetual inventory system, one entry at selling price in Sales Journal results in a debit to Accounts Receivable and a credit to Sales. Another entry at cost results in a debit to Cost of Goods Sold and a credit to Inventory. 7-17 LO 3 POSTING THE SALES JOURNAL Illustration 7-7 2017 2017 2017 2017 2017 7-18 Companies make daily postings from the sales journal to the individual accounts receivable in the subsidiary ledger. LO 3 POSTING THE SALES JOURNAL Illustration 7-7 2017 2017 2017 2017 2017 7-19 Posting to the general ledger is done monthly. LO 3 PROVING THE LEDGERS Illustration 7-8 7-20 LO 3 ADVANTAGES OF SALES JOURNAL One-line entry for each sales transaction saves time. Only totals, rather than individual entries, are posted to the general ledger. 7-21 A division of labor results. LO 3 Cash Receipts Journal Illustration 7-9 Journalizing and posting the cash receipts journal 2017 In the cash receipts journal, companies record all receipts of cash. 7-22 LO 3 Posting Not all of the subsidiary or general ledger accounts are shown on the illustration to the right. See Illustration 7-9 for the complete illustration. Illustration 7-9 Journalizing and posting the cash receipts journal 7-23 Illustration 7-9 PROVING THE LEDGERS Illustration 7-11 Proving the ledgers after posting the sales and the cash receipts journals 7-24 LO 3 Special Journals Question Cash sales of merchandise are recorded in the a. cash payments journal. b. cash receipts journal. c. general journal. d. sales journal. 7-25 LO 3 Special Journals Question Which of the following is not one of the credit columns in the cash receipts journal: a. Other accounts b. Accounts payable c. Accounts receivable d. Sales 7-26 LO 3 Purchases Journal Illustration 7-13 Journalizing and posting the purchases journal 2017 2017 2017 2017 7-27 Daily postings are made from the purchases journal to the accounts payable subsidiary ledger. LO 3 Purchases Journal Illustration 7-13 Journalizing and posting the purchases journal 2017 2017 2017 At the end of the accounting period, the company posts totals to the general ledger. 7-28 LO 3 PROVING THE LEDGERS Illustration 7-14 Proving the equality of the purchases journal 7-29 LO 3 Special Journals Question All of the following are advantages of using subsidiary ledgers except they: a. show transactions affecting one customer or one creditor in a single account. b. free the general ledger of excessive details. c. eliminate errors in individual accounts. d. make possible a division of labor. 7-30 LO 3 Cash Payments Journal Illustration 7-16 Journalizing and posting the cash payments journal 2017 In a cash payments (cash disbursements) journal, companies record all disbursements of cash. 7-31 LO 3 Cash Payments Journal Illustration 7-16 2017 2017 2017 2017 7-32 LO 3 Cash Payments Journal 2017 2017 2017 2017 Illustration 7-16 2017 2017 7-33 LO 3 PROVING THE LEDGERS Illustration 7-17 Proving the ledgers after postings from the sales, cash receipts, purchases, and cash payments journals 7-34 LO 3 Special Journals Question Credit purchases of equipment or supplies other than merchandise are recorded in the: a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal. 7-35 LO 3 Special Journals Question Cash payments of merchandise are recorded in the: a. cash payments journal. b. cash receipts journal. c. general journal. d. purchases journal. 7-36 LO 3 Effects of Special Journals on General Journal Special journals substantially reduce the number of entries that companies make in the general journal. Only transactions that cannot be entered in a special journal are recorded in the general journal. Also, correcting, adjusting, and closing entries are made in the general journal. 7-37 LO 3 Illustration 7-18 Journalizing and posting the general journal 7-38 LO 3 DO IT! 3 Special Journals Swisher Company had the following transactions during March. 1. Collected cash on account from Oakland Company. 2. Purchased equipment by signing a note payable. Cash Receipts Journal 3. Sold merchandise on account. 4. Purchased merchandise on account. 5. Paid $2,400 for a 2-year insurance policy. Identify the journal in which each of the transactions above is recorded. 7-39 LO 3 DO IT! 3 Special Journals Swisher Company had the following transactions during March. 1. Collected cash on account from Oakland Company. 2. Purchased equipment by signing a note payable. General Journal 3. Sold merchandise on account. 4. Purchased merchandise on account. 5. Paid $2,400 for a 2-year insurance policy. Identify the journal in which each of the transactions above is recorded. 7-40 LO 3 DO IT! 3 Special Journals Swisher Company had the following transactions during March. 1. Collected cash on account from Oakland Company. 2. Purchased equipment by signing a note payable. 3. Sold merchandise on account. 4. Purchased merchandise on account. Sales Journal 5. Paid $2,400 for a 2-year insurance policy. Identify the journal in which each of the transactions above is recorded. 7-41 LO 3 DO IT! 3 Special Journals Swisher Company had the following transactions during March. 1. Collected cash on account from Oakland Company. 2. Purchased equipment by signing a note payable. 3. Sold merchandise on account. 4. Purchased merchandise on account. 5. Paid $2,400 for a 2-year insurance policy. Purchases Journal Identify the journal in which each of the transactions above is recorded. 7-42 LO 3 DO IT! 3 Special Journals Swisher Company had the following transactions during March. 1. Collected cash on account from Oakland Company. 2. Purchased equipment by signing a note payable. 3. Sold merchandise on account. 4. Purchased merchandise on account. 5. Paid $2,400 for a 2-year insurance policy. Cash Payments Journal Identify the journal in which each of the transactions above is recorded. 7-43 LO 3 A Look at IFRS LEARNING OBJECTIVE 4 Compare accounting information systems under GAAP and IFRS. Relevant Facts Similarities 7-44 The basic concepts related to an accounting information system are the same under GAAP and IFRS. The use of subsidiary ledgers and control accounts, as well as the system used for recording transactions, are the same under GAAP and IFRS. LO 4 A Look at IFRS Relevant Facts Differences 7-45 Many companies will be going through a substantial conversion process to switch from their current reporting standards to IFRS. Upon first-time adoption of IFRS, a company must present at least one year of comparative information under IFRS. LO 4 A Look at IFRS Looking to the Future The basic recording process shown in this textbook is followed by companies around the globe. It is unlikely to change in the future. The definitional structure of assets, liabilities, equity, revenues, and expenses may change over time as the IASB and FASB evaluate their overall conceptual framework for establishing accounting standards. In addition, high-quality international accounting requires both high-quality accounting standards and high-quality auditing. Similar to the convergence of GAAP and IFRS, there is a movement to improve international auditing standards. 7-46 LO 4 Copyright \"Copyright 2015 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.\" 7-47 PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted. PRINTED BY: irisgarcia3@student.kaplan.edu. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted