Kế toán, kiểm toán - Chapter 7: Accounting information systems

Chapter 7Accounting Information SystemsCopyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin7-*What are the 3 Characteristics of an Accounting Event?Specific to entityBusiness entity conceptMeasurable in monetary termsMonetary unit conceptImpact the entity’s assets, liabilities, and/or owners’ equityGoing concern conceptPeriodicity concept7-*What are the 9 Basic Combinations of Accounting Events?Assets increase, assets decreaseCash used to buy suppliesAssets increase, liabilities increaseSupplies purchases on accountAssets increase, owners’ equity increaseCustomer billed for services receivedAssets decrease, liabilities decreaseSupplies previously purchased on account are paid forAssets decreases; owners’ equity decreaseSupplies are used in business7-*Basic Combinations ContinuedLiabilities increase, liabilities decreaseA long-term note is used to pay off several small liabilitiesLiabilities increase, owners’ equity decreaseA bill for utilities is received, but not paidLiabilities decrease, owners’ equity increaseA customer who had previously prepaid for services, has now had those services providedOwners’ equity increase, owners’ equity decreaseOne type of capital stock is exchanged for another type of capital stock (this topic is covered in Chapter 13)7-*What are Debits and Credits?Debits and credits aren’t good or bad, they’re not happy or sad, ratherDebit indicates “left” as in the left side of an accountCredit indicates “right” as in the right side of an accountSo What is an Account?A place in the accounting records where the information pertaining to a particular asset, liability, or owners’ equity is maintained.An account has a DEBIT side and a CREDIT side and is often represented by a T account:7-*DebitCreditThe accounting equation ruleRecall: Assets = Liabilities + Owners’ equityThen, Assets are on the left; assets increase on the LEFT side of the account—with a DEBITTherefore, Liabilities and Owners’ equity which are on the right; increase on the RIGHT side of the account—with a CREDIT7-*7-*Asset AccountDebitIncreaseCreditDecreaseLiability AccountDebitDecreaseCreditIncreaseOwners’ Equity AccountDebitDecreaseCreditIncreaseRevenue and Expense RulesRevenues INCREASE net income; net income belongs to owners and INCREASES owners’ equity; therefore, revenues increase on the CREDIT side.Expenses DECREASE net income; net income belongs to owners and INCREASES owners’ equity; therefore, since an expense reduces net income, it will increase on the DEBIT side.7-*DebitDecreaseCreditIncreaseDebitIncreaseCreditDecrease7-*How do Debits and Credits Apply to the first 8 Basic Combinations?Assets increase, assets decreaseDR asset account; CR asset accountAssets increase, liabilities increaseDR asset account; CR liability accountAssets increase, owners’ equity increaseDR asset account; CR owners’ equity accountAssets decrease, liabilities decreaseDR liability account; CR asset account7-*DR and CR ContinuedAssets decrease, owners’ equity decreaseDR owner’s equity account; CR asset accountLiabilities increase, liabilities decreaseDR liability account; CR liability accountLiabilities increase, owners’ equity decreaseDR owners’ equity account; CR liability accountLiabilities decrease, owners’ equity increaseDR liability account; CR owners’ equity account7-*What are Adjusting Entries?Entries made to reflect internal eventsRevenue accrualIncrease revenue, increase assetRevenue deferralIncrease revenue, decrease liabilityExpense accrualIncrease expense, increase liabilityExpense deferralIncrease expense, decrease asset7-*What are Closing Entries?Zero-out income statement accountsTransfer the balances to owners’ equityCorporation—retained earningsDebit each revenue account for the amount of its balance and credit retained earningsCredit each expense account for the amount of its balance and debit retained earningsThe change in retained earnings is the net income (loss) for the period7-*What are the Advantages of Computer-Based Transaction Systems?Transactions posted quickly—no journalizing requiredDetailed listing can be printed at any timeInternal controlsA wide variety of reports can be generatedWhat are the Advantages of Database Systems?Business events can be recognized in addition to accounting eventsReduced operating inefficienciesElimination of redundant data throughout the company7-*What is a Business Event?Any activity that the company wishes to plan and evaluate.Includes accounting events and other eventsWhich of the Following is a Business, but not an Accounting Event?Determine the need for inventoryReceive inventoryPay for inventorySell inventoryAnswer: determine the need for inventory