basics-of-accounting-information-processing

Accounting system as they occur frequently divide the

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Unformatted text preview: ry typical data entry screen. It should look quite familiar. After the data are input, The subsequent processing (posting, etc.) is totally automated. Download free eBooks at bookboon.com 43 Basics of Accounting & Information Processing Computerized Processing Systems Debits 502 201 Utilities Expense Credits $1,000.00 Accounts Payable $1,000.00 * $1,000.00 Record entry #756 $1,000.00 Entry in balance Please click the advert Despite each product’s own look and feel, the persons primarily responsible for the maintenance and operation of the accounting function must still understand accounting basics such as those introduced in this chapter: accounts, debits and credits, journal entries, etc. Without that intrinsic knowledge, the data input decisions will quickly go astray, and the output of the computerized accounting system will become hopelessly trashed. So, while it is safe to assume that you will probably be working in a computerized accounting environment, it equally true to say that you should first come to understand the basic processing described in this and subsequent chapters. These principles will clearly guide you toward successful implementation and use of most any computerized accounting product, and the reports they produce. Download free eBooks at bookboon.com 44 Basics of Accounting & Information Processing T-accounts 11. T-accounts A useful tool for demonstrating certain transactions and events is the “t-account.” Importantly, one would not use t-accounts for actually maintaining the accounts of a business. Instead, they are just a quick and simple way to figure out how a small number of transactions and events will impact a company. T-accounts would quickly become unwieldy in an enlarged business setting. In essence, taccounts are just a “scratch pad” for account analysis. They are useful communication devices to discuss, illustrate, and think about the impact of transactions. The physical shape of a t-account is a “T,” and debits are on the left and credits on the right. The “balance” is the amount by which debits exceed credits (or vice versa). Below is the t-account for Cash for the transactions and events of Xao Corporation. Carefully compare this t-account to the actual running balance ledger account which is also shown (notice that the debits in black total to $33,800, the credits in red total to $7,500, and the excess of debits over credits is $26,300 -- which is the resulting account balance shown in blue). ACCOUNT: Cash CASH 25,000* 2,000 4,000 500 4,800 5,000 33,800 7,500 26,300 Date Description Jan. 1, 20X3 Journal page 1 Jan. 8, 20X3 Journal page 1 Jan. 18, 20X3 Journal page 2 Jan. 25, 20X3 Journal page 2 Jan. 28, 20X3 Balance $ Journal page 1 Jan. 4, 20X3 Credit Balance forward Jan. 1, 20X3 Debit Journal page 2 $ 25,000 25,000 $ 2,000 4,000 23,000 27,000 500 4,800 26,500 31,300 5,000 26,300 Download free eBooks at bookboon.com 45 Basics of Accounting & Information Processing T-accounts 11.1...
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