CHAPTER 3 Flashcards
Recording, Summarising & Posting Transactions
Source documents
Source of all information recorded by a business
Source document example ?
- Petty cash voucher
- Cheque received
- Wages/payroll records
- Cheque stubs/counterfoil
Accounting software package
Enable business to keep record and process transactions electronically
2 types of accounting software package
- Off the shelf - Bought and used by many organisation
- Be spoke - Designed and tailored for the business specific needs
Main advantage of a computerised accounting system VS manual
When one module is updated, the other related modules are automatically updated
Key features of a computerised accounting system
1) Controls
2) Standing data - data that will not change frequently
3) Account codes - general ledger
Cloud accounting
Data and software is held remotely on the computer servers of the service provider hosting the software
General ledger
Accounting record which summaries the financial affairs of a business
What’s in GL
- Details of asset, liabilities, capital, income and expenditure
- Consists of a large number of different ledger account
Does reconciliation between TR and Receivable ledger necessary in computerised accounting system
No, bcs both are updated simultaneously
When is sales tax accounted for? (Credit sale/purchase)
When invoice is received and is entered into the accounting system
When is sales tax accounted for ? (Cash sale/purchase)
When the money is received from the customer/paid to supplier
Tax posted to the sales tax control account @ the point of ???
Point of sale/purchase
Benefits of using code
1) Shorter
2) Save storage space
3) Identify the correct account for posting
Computer activity
Input → Processing → Output
How can data entry errors happen ?
⦿ Source document destroyed/damaged
⦿ Poor handwriting
⦿ Details omitted/incorrect
⦿ Transcription error
⦿ Poorly skilled staff
⦿ Malicious intent
How to reduce data entry error ?
⦿ Well-designed data entry screens that mirror the source documents for ease of entry
⦿ Well-designed form that are easy to read
⦿ Automatic data entry; scanning
⦿ Verification by entering twice & check for inconsistencies
⦿ Using tick boxes or dropdown list
⦿ Properly trained & experienced staff
⦿ Validation technique ??
Validation Technique
Ensure data entered is possible and reasonable BUT not necessarily correct
List 6 of Validation Technique
1) Field presence - essential field cannot blank
2) Field length - Correct min/max number of characters
3) Range - Within a predetermined range
4) Format - individual characters are valid
5) Batch header - match totaled by computers & totaled by documents in batch (batch processing)
6) Check digit - extra digit in code calculated by computer using algorithm
Batch processing
Similar transactions are gathered into batches, then each batch is sorted and processed by computer
Control total in batch processing
Make sure no error when batch is input ‣ total value of transaction input = previously calculated
Accounting package consists of…
Several accounting modules
Computer program/software
Instructions that tell electronics how to process data
Advantages of accounting package
⦿ Can be used by non-specialist
⦿ Large amount of data can be processed very quickly
⦿ More accurate
⦿ Data is analysed rapidly to produce useful informations
Disadvantages of accounting package
⦿ Initial time & cost involved in installing the system
⦿ Need for security check
⦿ Must develop system of coding
⦿ Lack of audit trail - not easy to trace mistake
⦿ Possible resistance
Module
A program which deals with one particular part of a business accounting system
What do you call several set of modules
Suit
Integrated software
Data entered in one module will be passed automatically through any other module if it’s relevant
Advantages of Integrated Software
⦿ Possible just to make one entry
⦿ Specify reports then software will auto extract required data
⦿ Simplify workload of user
Disadvantages of Accounting Software System
⦿ Requires more computer memory
⦿ Has fewer facilities than a set of specialised modules
Output from a receivable ledger system
- Invoice
- Statements
- Aged receivable list
- Sales analysis report
- Response to enquiries
- Customer lists
Output from a trade payable ledger system
- List of transactions posted
- Analysis of expenditure
- List of supplier balances
- Copies of supplier a/cs
Standing data example
- Account number
- Name
- Address
- Credit details
- Bank details
- Settlement discount details
Variable data example
- Transaction date
- Transaction description
- Transaction code
- Debits
- Credits
- Balance
Output from general ledger
1) Trial balance
2) Financial statement
Actual data needed by GL to update ledger accounts
1) Date
2) Description
3) Amount
4) Account codes @distinction code
