ACCOUNTING INFORMATION SYSTEMS
Fundamental System PrinciplesAccounting information systems (AIS) collect and process
data from transactions and events, organize them in useful reports and communicate results to
ADJUSTING ACCOUNTS AND PREPARING FINANCIAL
Timing and Reporting
A. The Accounting PeriodTo provide timely information, accounting systems prepare reports at
1. Time-period principle assumes that an organizations
ACCOUNTING FOR MERCHANDISING ACTIVITIES
A. Merchandise consists of products, also called goods, that a company acquires to resell to
customers. Merchandisers can be either wholesalers (those that buy f
Chapter 2 Notes
Analyzing and Recording Processsteps include:
A. Analyzing each transaction and event from source documents. Source documents are business
papers that identify and describe economic events and transactions. Examples: sales tickets,
Work Sheet as a Tool
A. The work sheet is an internal document that serves as a useful tool for organizing
accounting information. It is not a required report.
B. Benefits include: aids the preparation of financial statements,
INVENTORIES AND COST OF SALES
A. Items in Merchandise InventoryIncludes all goods that a company owns and holds for sale.
1. Goods in transitincluded if ownership has passed.
2. Goods on consignmentowned by co
CASH AND INTERNAL CONTROL
A. Purpose of Internal ControlAn internal control system consists of policies and procedures
managers use to:
1. Protect assets.
2. Ensure reliable accounting.
3. Promote efficient op
PLANT ASSETS, NATURAL RESOURCES AND INTANGIBLES
Plant AssetsTangible assets used in a company's operations that have a useful life of more
than one accounting period. Consistent with cost principle, recorded at cost. Cost inc
CURRENT LIABILITIES AND PAYROLL ACCOUNTING
Characteristics of Liabilities
A. Defining LiabilitiesProbable future payments of assets or services that a company is
presently obligated to make as a result of past transactions or
ACCOUNTING FOR PARTNERSHIPS
Partnership Form of OrganizationAn unincorporated association of two or more people to
pursue a business for profit as co-owners.
A. Characteristics of Partnerships
1. Voluntary association.
ACCOUNTING FOR RECEIVABLES
Accounts ReceivableAmounts due from customers for credit sales. They occur when a
customer uses credit cards issued by third parties and when a company gives credit directly to
Chapter 1 Notes
Importance of Accountingwe live in the information age, where information, and its reliability,
impacts the financial well-being of us all.
A. Accounting ActivitiesAccounting is an information and measurement system that identifies, rec