The Runners Company history ok for 2020.docx - 1 |15 THE...

This preview shows page 1 - 4 out of 16 pages.

The preview shows page 2 - 4 out of 16 pages.
1 |15THE RUNNERSCOMPANY
2 |15The AccountingCapstone Practice SetThe Runners CompanyThe Company History and InstructionsRunners Company was started in the State of Ohio two years ago by Mr. Noah Arc as a soleproprietorship. The company distributes running shoes to retailers all over the United States.Runners Company currently maintains an accrual based manual accounting system and usesspecialized journals to record its business transactions.A general ledger is maintained, as are anaccounts receivable subsidiary ledger and an accounts payable subsidiary ledger.Financialstatements are prepared at the end of each month, and the books are closed on December 31.An accounting cycle comparison:Accounting procedures are essentially the same whether they are performed manually or on acomputer.The following is a list of the accounting cycle steps in a manual accounting system ascompared to the steps in a computerized accounting system.STEPS OF THE ACCOUNTING CYCLEManual Accounting SystemComputerized Accounting System1. Business transactions occur and generatesource documents.1. Business transactions occur and generatesource documents.2. Analyze and record business transactionsmanually into a journal.2. Analyze and record business transactions into acomputerized journal.3. Post or transfer information from journal toledger.3. Computer automatically posts informationfrom journal to ledger.4. Prepare a trial balance.4. Trial balance is prepared automatically.5. Prepare a worksheet, determine and enternecessary adjustments.5. Determine and enter necessary adjustments.6. Journalize and post adjusting entries.6.Journalize the adjustments.
3 |157. Prepare financial statements.7. Financial statements are preparedautomatically.8. Journalize and post-closing entries.8. Closing procedures are completedautomatically.9. Prepare a post-closing trial balance9. Trial balance is automatically prepared asneeded.The accounting cycle comparison shows that the accountant’s task of initially analyzing business transactionsin terms of debits and credits (both routine business transactions and adjusting entries) is required in bothmanualandcomputerized accounting systems.However, in a computerized accounting system, the "drudge"work of posting transactions,creating and completingworksheets and financial statements,and performingthe closingproceduresis all handled automatically. In some computerized accounting programs,entries maybeentered onbusiness forms and the computer will show the entry in debit/credit format when viewing theJournal.In addition, computerized accountingsystems canperform accounting procedures at greater speeds andwith greater accuracy than can be achieved in amanual accounting system.Itis important to recognize,however,that the computer is only a tool that canaccept and processinformation supplied by theaccountant.Each business transactionand adjusting entry must first beanalyzed and recorded in a

Upload your study docs or become a

Course Hero member to access this document

Upload your study docs or become a

Course Hero member to access this document

End of preview. Want to read all 16 pages?

Upload your study docs or become a

Course Hero member to access this document

Term
Spring
Professor
Haji
Tags
Balance Sheet, Generally Accepted Accounting Principles, Accounting software, Mr Noah Arc

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture