CH2 AIS REVIEWER Flashcards
An agreement between two entities to exchange goods or services or any other event that can be measured in economic terms by an organization.
Transaction
The process that begins with capturing transaction data and ends with an informational output such as the financial statements.
Transaction processing
Transactions that happen a great many times, such as giving up cash to get inventory from a supplier and giving employees a paycheck in exchange for their labor.
give-get exchange
The major give-get
exchanges that occur frequently
in most companies.
business processes or transaction
cycles
Activities associated
with selling goods and services
in exchange for cash or a
future promise to receive cash.
Revenue Cycle
Where companies purchase inventory for resale or raw materials to use in producing products in exchange for cash or a future promise to pay cash.
Expenditure Cycle
Where raw materials are transformed into finished goods.
Production cycle
Where employees are hired, trained, compensated, evaluated, promoted, and terminated.
Human resources/payroll cycle
Where companies sell shares in the company to investors and borrow money and where investors are paid dividends and interest is paid on loans.
Financing cycle
The first step in processing transactions, capture the data for each transaction that takes place and enter them into the system.
Data input
What are the three facets of each business activity in data input?
Activity of interest, resources, and people.
Documents used to capture transaction data at its source. Examples include sales orders, purchase orders and employee time cards.
Source documents
Records of company data sent to an external party and then returned to the system as input. Prepared in machine readable form to facilitate their subsequent processing as input records.
Turnaround documents
The collection of transaction data in machine-readable form at the time and place of origin. Examples are point of sale terminals and ATMs.
Source data automation
A ledger that contains summary-level data for every asset, liability, equity, revenue, and expense account of the organization.
General ledger
A ledger used to record detailed data for a general ledger account with many individual subaccounts, such as accounts receivable, inventory, and accounts payable.
Subsidiary ledger
The general ledger account corresponding to a subsidiary ledger is callled a..
Control account
The systematic assignment of numbers or letters to items to classify and organize them.
Coding
Items are numbered consecutively so that gaps in the sequence code indicate missing items that should be investigated.
Sequence codes
Blocks of numbers
reserved for specific categories
of data, thereby helping to organize
the data. An example is
a chart of accounts
Block code
Two or more subgroups
of digits used to code
an item. A group code is often
used in conjunction with a block
code.
Group Codes
Letters and
numbers interspersed to
identify an item. The
code is derived from the
description of the item and is
usually easy to memorize.
mnemonic codes
A listing of
all the numbers assigned to balance
sheet and income statement
accounts. The account
numbers allow transaction
data to be coded, classified,
and entered into the proper
accounts. They also facilitate
financial statement and report
preparation.
Chart of Accounts
A journal used
to record infrequent or nonroutine
transactions, such as loan
payments and end-of-period
adjusting and closing entries.
General journal
