Ch8 - Chapter 8 - Accounting information systems CHAPTER...

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Chapter 8 - Accounting information systems CHAPTER OVERVIEW Chapters 1 to 6 covered the accounting cycle for both service businesses (Chapters 1-4) and retailing businesses (Chapter 5 and 6). Throughout those chapters frequent reference was made to the use of computers at various steps in the accounting cycle. We now turn our attention to an accounting information system and a more in-depth discussion of computers in accounting. In addition, we introduce special journals and subsidiary ledgers. The learning objectives for this chapter are to: 1. Describe an effective accounting information system. 2. Understand both computerised and manual accounting systems. 3. Understand how spreadsheets are used in accounting. 4. Use the sales journal, the cash receipts journal and the accounts receivable ledger. 5. Use the purchases journal, the cash payments journal and the accounts payable ledger. CHAPTER REVIEW Objective 1 - Describe an effective accounting information system. An accounting information system is the combination of people, procedures, and business records that a company maintains to manage financial data. Because each business has specific needs, businesses develop an accounting information system to meet their individual needs. An effective information system provides control , compatibility , flexibility , and a favourable cost/ benefit relationship . Internal controls are methods and procedures that a business uses to safeguard assets, authorise transactions, and ensure accuracy of the accounting records. Compatibility means that the information system works smoothly with the business’s other operations. A system is flexible if it can be easily adapted to changes in the way a business operates. A favourable cost/benefit relationship is one in which the benefits of the system are greater than the cost of the system. Computers process data with accuracy and speed. The basic components of a computer system are 1) hardware , 2) software , and 3) personnel . Hardware is the electronic equipment which makes up the system - the computers, disk drives, monitors, printers, and so on. Modern systems can share information through the use of networks and the Internet . Software is the set of instructions that directs the computer to perform specific tasks. Some software packages operate independently from other activities while others, particularly in larger companies, are integrated into the company’s overall database . Personnel are key to the success of all information systems, along with security measures to ensure the confidentiality of the information contained within the system. Objective 2 - Understand both computerised and manual accounting systems. Inputs
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This note was uploaded on 10/10/2010 for the course ECON 7300 at University of Sydney.

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Ch8 - Chapter 8 - Accounting information systems CHAPTER...

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