Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !

sen Uni"e#si $

Lesson notes Lesson 8 Accounting Information System Learning objectives %& Desc#i'e he (#inci(les of (#o(e#l$ )esi*ne) accoun in* s$s ems& +& Desc#i'e an) illus #a e he (#inci(les of in e#nal con #ol of accoun in* info#ma ion s$s ems& ,& Desc#i'e an) illus #a e he use of s(ecial -ou#nals an) su'si)ia#$ le)*e#s o (#ocess accoun in* )a a mo#e efficien l$& .& Desc#i'e he use of elec #onic )a a (#ocessin* /ED01 s$s ems o (#ocess accoun in* )a a& Teaching hours S u)en s ma-o# in accoun in*2 , hou#s O he#s2 + hou#s

Teaching contents: An accoun in* info#ma ion s$s em /AIS1 is he s$s em of #eco#)s ha a 'usiness kee(s o main ain i s accoun in* s$s em& This inclu)es he (u#chase, sales an) nominal le)*e#s an) cash 'ooks of he 'usiness& In a mo#e *ene#al sense, i inclu)es he en i#e ne 3o#k of communica ions use) '$ a 'usiness o#*ani4a ion o (#o"i)e nee)e) info#ma ion& 5hile his 3as (#e"iousl$ a (a(e#! 'ase) (#ocess, mos mo)e#n 'usinesses no3 use com(u e#i4e) accoun in* s$s ems&

Fundamental Principles of AIS

Because of )iffe#ences in 'usinesses, in he num'e# of #ansac ions o 'e (#ocesse), an) in he uses ma)e of accoun in* )a a, accoun in* s$s ems 3ill "a#$ f#om 'usiness o 'usiness& 6o3e"e#, a num'e# of '#oa) (#inci(les a((l$ o all s$s ems, 3hich a#e Cos !Effec i"eness Balance& The info#ma ion "alue of he #e(o# s (#o)uce) shoul) 'e a leas e7ual o he cos of (#o)ucin* hem& Fle8i'ili $ o mee fu u#e nee)s& The accoun in* s$s em no onl$ mus 'e ailo#e) o mee he s(ecific nee)s of each 'usiness, 'u also mus 'e fle8i'le enou*h o mee he chan*in* )eman)s f#om ne3 *o"e#nmen #e*ula ions, chan*es in accoun in* (#inci(les, o#*ani4a ional chan*es necessa#$ o mee (#ac ices of com(e in* 'usinesses, chan*es in )a a (#ocessin* echnolo*$, o# o he# fac o#s& A)e7ua e in e#nal con #ol& The s$s em shoul) ai) mana*emen in con #ollin* o(e#a ions& Effec i"e #e(o# in*& 5hen financial #e(o# s a#e (#e(a#e), he #e7ui#emen s an) kno3le)*e of he use# of accoun in* info#ma ion shoul) 'e #eco*ni4e)& A)a( a ion o o#*ani4a ion s #uc u#e& The accoun in* s$s em mus 'e ailo#e) o he

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

o#*ani4a ional s #uc u#e of each 'usiness

Internal ontrols of AIS

The o'-ec i"es of an accoun in* info#ma ion s$s em ma$ )iffe# f#om en i $ o en i $, 'u mos info#ma ion s$s ems ha"e as an o'-ec i"e he (#o"ision of #elia'le info#ma ion on a imel$ 'asis& In e#nal con #ols a#e a se#ial (#oce)u#es ha a#e )esi*ne) o (#o"i)e mana*emen 3i h some )e*#ee of assu#ance ha he info#ma ion (#o"i)e) '$ he accoun in* info#ma ion s$s em is #elia'le an) (#o"i)e) on a imel$ 'asis& These (#oce)u#es inclu)e2 Com(e en (e#sonnel an) #o a ion of )u ies& I is necessa#$ ha all accoun in* em(lo$ees 'e a)e7ua el$ #aine) an) su(e#"ise) o (e#fo#m hei# -o's& I is also a)"isa'le o #o a e cle#ical (e#sonal (e#io)icall$ f#om -o' o -o'& Assi*nmen of #es(onsi'ili $& To mo i"a e em(lo$ees 3o#k efficien l$, hei# #es(onsi'ili ies mus 'e clea#l$ )efine)& Se(a#a ion of #es(onsi'ili $ fo# #ela e) o(e#a ion& To )ec#ease he (ossi'ili $ of inefficienc$, e##o#s, an) f#au), #es(onsi'ili $ fo# a se7uence of #ela e) o(e#a ions shoul) 'e )i"i)e) amon* 3o o# mo#e (e#sons& Fo# e8am(le, no one in)i"i)ual shoul) 'e au ho#i4e) o o#)e# me#chan)ise, "e#if$ he #ecei( of he *oo)s, an) (a$ he su((lie#& Se(a#a ion of o(e#a ion an) accoun in*& 9es(onsi'ili $ fo# main ainin* he accoun in* #eco#)s shoul) 'e se(a#a e) f#om he #es(onsi'ili $ fo# en*a*in* in 'usiness #ansac ions an) fo# he cus o)$ of he fi#m:s asse s& 0#oofs an) secu#i $ measu#es& 0#oofs an) secu#i $ measu#es shoul) 'e use) o safe*ua#) 'usiness asse s an) assu#e #elia'le accoun in* )a a& In)e(en)en #e"ie3& To )e e#mine 3he he# he o he# in e#nal con #ol (#inci(les a#e 'ein* effec i"el$ a((lie), he s$s em shoul) 'e (e#io)icall$ #e"ie3e) an) e"alua e) '$ in e#nal au)i o#s in)e(en)en of he em(lo$ees #es(onsi'le fo# o(e#a ions&

The accounting process

The accoun in* (#ocess is a se#ies of ac i"i ies ha 'e*ins 3i h a #ansac ion an) en)s 3i h he closin* of he 'ooks& The ma-o# s e(s of he accoun in* (#ocess a#e as follo3s2 I)en if$ he #ansac ion o# o he# #eco*ni4a'le e"en ; 0#e(a#e he #ansac ion:s sou#ce )ocumen such as a (u#chase o#)e# o# in"oice& Anal$4e an) classif$ he #ansac ion& 9eco#) he #ansac ion '$ makin* en #ies in he a((#o(#ia e -ou#nal, such as he sales -ou#nal, (u#chase -ou#nal, cash #ecei( o# )is'u#semen -ou#nal, o# he *ene#al -ou#nal&

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

0os *ene#al -ou#nal en #ies o he le)*e# accoun s& The a'o"e s e(s a#e (e#fo#me) h#ou*hou he accoun in* (e#io) as #ansac ions occu# o# in (e#io)ic 'a ch (#ocesses& The follo3in* s e(s a#e (e#fo#me) a he en) of he accoun in* (e#io)2 0#e(a#e he #ial 'alance o make su#e ha )e'i s e7ual c#e)i s& Co##ec an$ )isc#e(ancies in he #ial 'alance& If he columns a#e no in 'alance, look fo# ma h e##o#s, (os in* e##o#s, an) #eco#)in* e##o#s& 0#e(a#e a)-us in* en #ies o #eco#) acc#ue), )efe##e), an) es ima e) amoun s& 0os a)-us in* en #ies o he le)*e# accoun s& 0#e(a#e he a)-us e) #ial 'alance& 0#e(a#e he financial s a emen s& omponents of an AIS

An accoun in* s$s em is com(#ise) of accoun in* #eco#)s an) a se#ies of (#ocesses an) (#oce)u#es assi*ne) o s aff, "olun ee#s, an)<o# ou si)e (#ofessionals& The *oals of he accoun in* s$s em a#e o ensu#e ha financial )a a an) economic #ansac ions a#e (#o(e#l$ en e#e) in o he accoun in* #eco#)s an) ha financial #e(o# s necessa#$ fo# mana*emen a#e (#e(a#e) accu#a el$ an) in a imel$ fashion& T#a)i ionall$, he accoun in* s$s em inclu)es he follo3in* com(onen s2 Source documents The sou#ce )ocumen is he o#i*inal #eco#) of a #ansac ion& Du#in* an au)i , sou#ce )ocumen s a#e use) as e"i)ence ha a (a# icula# 'usiness #ansac ion occu##e)& E8am(les of sou#ce )ocumen s inclu)e2 Cash #ecei( s C#e)i ca#) #ecei( s Cash #e*is e# a(es Cancelle) checks Cus ome# in"oices Su((lie# in"oices 0u#chase o#)e#s Time ca#)s De(osi sli(s No es fo# loans 0a$men s u's fo# in e#es A a minimum, each sou#ce )ocumen shoul) inclu)e he )a e, he amoun , an) a )esc#i( ion of he #ansac ion& 5hen (#ac ical, 'e$on) hese minimum #e7ui#emen s sou#ce )ocumen s shoul)

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

con ain he name an) a))#ess of he o he# (a# $ of he #ansac ion& 5hen a sou#ce )ocumen )oes no e8is , fo# e8am(le, 3hen a cash #ecei( is no (#o"i)e) '$ a "en)o# o# is mis(lace), a )ocumen shoul) 'e *ene#a e) as soon as (ossi'le af e# he #ansac ion, usin* o he# )ocumen s such as 'ank s a emen s o su((o# he info#ma ion on he *ene#a e) sou#ce )ocumen & Once a #ansac ion has 'een -ou#nali4e), he sou#ce )ocumen shoul) 'e file) an) ma)e #e #ie"a'le so ha #ansac ions can 'e "e#ifie) shoul) he nee) a#ise a a la e# )a e& Special journals S(ecial -ou#nals a#e accoun in* #eco#)s o# )e"ices )esi*ne) o #eco#) a s(ecific $(e of #ansac ion in a hi*hl$ efficien manne#& Because a s(ecial -ou#nal is use) onl$ o #eco#) a s(ecific $(e of #ansac ion, he -ou#nal ma$ 'e loca e) a he #ansac ion si e an) main aine) '$ em(lo$ees o he# han accoun in* (e#sonnel& Thus s(ecial -ou#nals #e)uce he ime, effo# , an) cos of #eco#)in* #ou ine 'usiness #ansac ions&
Transactions Sales on credit Purchases on credit Cash receipts Cash Payments Special Journal (Abbrevviation) Sales Journal (S) Purchases Journal (P) Cash Receipts Journal (CR) Cash Payments Journal (CP)

The sales -ou#nal is use) onl$ fo# #eco#)in* sales of me#chan)ise on accoun ; sales of me#chan)ise fo# cash a#e #eco#)e) in he cash #ecei( s -ou#nal& Sales of non!me#chan)ise asse s a#e #eco#)e) in he cash #ecei( s -ou#nal o# he *ene#al -ou#nal, )e(en)in* u(on 3he he# he sale 3as ma)e fo# cash o# on accoun & The (u#chase -ou#nal is )esi*ne) o allo3 fo# he #eco#)in* of e"e#$ hin* (u#chase) on accoun & Cash (a$men s -ou#nal #eco#)s all #ansac ions in 3hich cash is (ai)& Subsidiary Ledgers and !eneral ledger Think of he accoun in* s$s em as a 3heel 3hose hu' is he *ene#al le)*e# /G<L1& Fee)in* he hu' info#ma ion a#e he s(okes of he 3heel& These inclu)e = Accoun s #ecei"a'le = Accoun s (a$a'le = O#)e# en #$ = In"en o#$ con #ol = Cos accoun in* = 0a$#oll = Fi8e) asse s accoun in* These mo)ules a#e le)*e#s hemsel"es& 5e call hem su'le)*e#s& Each con ains he )e aile) en #ies of i s s(ecific fiel), such as accoun s #ecei"a'le& The su'le)*e#s summa#i4e he en #ies, hen sen) he summa#$ u( o he *ene#al le)*e#& Fo# e8am(le, each )a$ he #ecei"a'les su'le)*e#

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

#eco#)s all c#e)i sales an) (a$men s #ecei"e)& The #ansac ions ne o*e he# hen *o u( o he G<L o inc#ease o# )ec#ease A<9, inc#ease cash an) )ec#ease in"en o#$& Gene#al le)*e# is he (#inci(al le)*e#, 3hich con ains all of he 'alance shee an) income s a emen accoun s& Each su'si)ia#$ le)*e# is #e(#esen e) in he *ene#al le)*e# '$ a summa#i4in* accoun , calle) a con #ollin* accoun & The 'alance in he con #ollin* accoun s mus e7ual he sum of he 'alances in he su'si)ia#$ le)*e#s

omputeri"ed AIS

A s$s em ha uses an elec #onic com(u e# o (#ocess accoun in* )a a ma$ 'e e#me) an elec #onic )a a (#ocessin* /ED01 s$s em o# com(u e#i4e) accoun in* info#ma ion s$s em& An elec #onic )a a (#ocessin* s$s em (#ocesses accoun in* )a a in much he same 3a$ as )oes a manual s$s em 'u 3i h *#ea e# s(ee) an) accu#ac$& Fo# e8am(le, elec #onic cash #e*is e#s a#e 'ein* use) 3i h he com(u e# o (#ocess 'o h cash an) c#e)i sales& Fo# cash sales, he )a a en e#e) '$ he salescle#k in he elec #onic cash #e*is e# (#o"i)e he 'asis fo# he com(u e# o u()a e he accoun in* #eco#)s, inclu)in* he cash #ecei( s -ou#nal an) he *ene#al le)*e# accoun s& Fo# c#e)i sales, he sales cle#k en e#s he cus ome#:s accoun num'e# an) o he# #ele"an )a a in he elec #onic cash #e*is e#& The com(u e# hen u()a es he cus ome#:s accoun in he su'si)ia#$ le)*e# an) he o he# accoun in* #eco#)s& 0#in ou s of he u()a e) *ene#al le)*e# an) su'si)ia#$ accoun 'alances, he sales -ou#nal, an) cus ome#s s a emen s of accoun can 'e o' aine) 3hen nee)e)& In #ecen $ea#s, mic#ocom(u e#s an) minicom(u e#s ha"e ma)e elec #onic )a a (#ocessin* affo#)a'le o small an) me)ium!si4e 'usinesses& Some small 'usinesses ha"e 'een a'le o *ain he use of elec #onic )a a (#ocessin* h#ou*h com(u e# se#"ice cen e#s, 3hich (#o"i)e com(u e# se#"ices on a fee!'asis&

Summary

As he s$s em of #eco#)s ha a 'usiness kee(s o (#o"i)e financial info#ma ion, Accoun in* info#ma ion s$s em /AIS1 has 'ase) i s )esi*n on some fun)amen al (#inci(les& An accoun in* s$s em is com(#ise) of accoun in* #eco#)s an) a se#ies of (#ocesses an) (#oce)u#es assi*ne) o s aff, "olun ee#s, an)<o# ou si)e (#ofessionals, 3hich #a)i ionall$ inclu)es sou#ce )ocumen s, s(ecial -ou#nals, su'si)ia#$ -ou#nals an) *ene#al -ou#nals& In #ecen $ea#s, 'ecause of he )e"elo(men of IT in)us #$, manual!'ase) accoun in* info#ma ion s$s em has 'een #e(lace) '$ com(u e#i4e) AIS&

Task Team of FUNDAMENTAL ACCOUNTING School of Business, Sun Ya !sen Uni"e#si $

#ey points %& The (#inci(les a((l$in* o all accoun in* info#ma ion s$s ems& +& Com(a#in* of manual accoun in* )a a (#ocessin* me ho)s an) com(u e#i4e) )a a (#ocessin* me ho)s& $eading material %& 0hili( E& Fess an) Ca#l S& 5a##en, Accounting Principles, Sou h!5es e#n 0u'lishin* Co&, %>?@&

+& Bu##o3es, Ashle$ 5& Co#e Conce( s of Accoun in* Info#ma ion S$s ems& Issues in
Accounting E)uca ion, Ma$+AAB, Col& +A Issue +&

,& Su on, S e"e G&, The #ole of AIS #esea#ch in *ui)in* (#ac ice&,International Journal of
Accounting Information Systems, Ma#+AAB, Col& D Issue %&

.& 6u chison, 0aul D&, 5hi e, C#ai* G&, an) Dai*le, 9onal) E&, A)"ances in Accoun in*
Info#ma ion S$s ems an) In e#na ional Eou#nal of Accoun in* Info#ma ion S$s ems2 fi#s en "olumes /%>>+F+AA,1&, International Journal of Accounting Information Systems, Oc +AA.,
Col& B Issue ,&

B& Lin, Fen*$i, A Unified Accounting Information Framework To Modeling Bank

Accounting Systems, Journal of Applied Business Research, Fall2004, ol! 20 Issue 4!