Lecture 7 - Accounting 1A Lecture 7 The Accounting Subsystem Special Journals and Subsidiary Ledgers Lecturer Sharron ONeill Text reference Chapter

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1 1 Accounting 1A - Lecture 7 The Accounting Subsystem: Special Journals and Subsidiary Ledgers Lecturer: Sharron O’Neill Text reference: Chapter 6, Mladenovic, Carlon, Loftus, Palm, Kimmel, Kieso & Weygandt 2 Learning Objectives 9 Review the basic principles of accounting information systems 9 Explain the purpose of accounting subsystems: 9 control accounts and subsidiary ledgers 9 special journals 9 Demonstrate the ability to record transactions in special journals and correctly post entries to the general and subsidiary ledgers 9 Demonstrate the ability to reconcile subsidiary ledger to control accounts 3 The Accounting Cycle Steps in the cycle Accounting Records 1. Recognise & analyse transactions 2. Journalise transactions 3. Post to ledger accounts 4. Prepare trial balance of GL 6. Prepare financial statements Source documents General & Special Journals General ledger Trial balance Financial statements 5. Prepare & post adjusting entries General Journal & Ledger
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2 4 Principles of Accounting Information Systems 1. Cost effectiveness “Cost versus benefits” consideration 2. Useful output Relevant, reliable, understandable, timely, comparable 3. Flexibility Technological advances, increased competition, changing accounting principles, organisational growth, government regulation and de-regulation 5 Control Accounts & Subsidiary Ledgers Subsidiary ledgers are groups of accounts with a common characteristic. The control account provides a summary of the details in the subsidiary ledgers. 6 Control Accounts & Subsidiary Ledgers Some common control accounts are: ¾ Accounts Receivable (customers) which collects detailed transaction data of individual customers. ¾ Accounts Payable (suppliers) which collects detailed transaction data of individual creditors. ¾ Fixed Assets collects details about non-current assets such as buildings, furniture, equipment, motor vehicles ¾ Inventory collects details about the various inventories held by a business
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3 7 ¾ Provides up-to-date decision information in both detailed and summarised forms ¾ Removes excessive detail from the general ledger ¾ Provide a means of internal control ¾ Provide for segregation of duties Advantages of Control Accounts and Subsidiary Ledgers 8 Recording subsidiary ledger information in a journal 3,200 100 Cash at Bank 16 Jan A/c (Received cash from customer – P. Able) Credit Debit Details Date When any transaction affects a control account the journal entry needs to cross-reference the relevant subsidiary ledger account. For the Accounts Receivable Control GL account this means identifying the relevant customer account. If customer P. Able (A/c # AR01) pays us 3,200 cash owing… Posting information from journals to the subsidiary ledger 3,200 100 Cash at Bank 16 Jan 2006 110/AR01 A/c 3,200 Account Receivable Credit Debit Details Date This journal needs to be posted to the general ledger as usual AND any information affecting the Account Receivable Control account ALSO needs to be posted to the subsidiary ledger on the day the journal is prepared… 4,410 Dr 1,210
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This note was uploaded on 08/22/2011 for the course FINC 2011 taught by Professor Craigmellare during the Three '10 term at University of Sydney.

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Lecture 7 - Accounting 1A Lecture 7 The Accounting Subsystem Special Journals and Subsidiary Ledgers Lecturer Sharron ONeill Text reference Chapter

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