List the components of an accounting information system. List the special journa

Question

List the components of an accounting information system.

List the special journals and discuss the basics of special journals.

Discuss the concept of subsidiary ledgers including the accounts receivable ledger and the accounts payable ledger.

Discuss the subsidiary ledger/control account relationship.

Discuss proving the ledgers or balancing the subsidiary ledgers to the trial balance.

Discuss the use of computer technology in accounting such as off-the-shelf programs like QuickBooks or Sage 50.

Explain how to compute sales tax owed for a business.

I really need the answers. Please.

Explanation / Answer

I) List the components of an accounting information system.

a) People

b) Procedures & instructions

c)Data

d)Software

e)Information technology structure

f)Internal Controls

II)List the special journals and discuss the basics of special journals.

a) Sales Journals: Sales journals record transactions that involve sales purely on credit.Source documents here would probably be invoices. Provides a chronological record of all credit sales made in the life of a business. Credit sales are transactions where the goods are sold and payment is received at a later date. The source documents for the Sales journal are copies of all invoices given to the debtors.

b)Cash Journals: A cash receipts journal (CRJ) records transactions that involve payments received with cash.Source documents would probably be receipts and cheque butts. The CRJ records the cash inflow of a business. Discount allowed is an expense as the discount allowed is the cost to the seller of obtaining an inflow of cash from a debtor weeks earlier than would be the case.

c)Purchase Journals: Purchases Journals record transactions that involve purchases purely on credit.Source documents are invoices. For instance, the purchase of inventory on credit is recorded in the purchases journal.

d)Cash Payment Journals: Cash Payments Journals record transactions that involve expenditures paid with cash. Source documents are likely receipts and cheque butts. The CPJ records the cash outflow of a business. If the owner of a business withdraws cash from the business an entry is made in the CPJ. Discount received is the cash discount received by a purchaser, it is an income item for the purchaser

III) Discuss the concept of subsidiary ledgers including the accounts receivable ledger and the accounts payable ledger.

A subsidiary ledger contains the details to support a general ledger control account. For instance, the subsidiary ledger for accounts receivable contains all of the information on each of the credit sales to customers, each customer's remittance, return of merchandise, discounts, and so on. With these details in the subsidiary ledger, the Accounts Receivable account in the general ledger can be a control account. As a control account, it will simply report the aggregate amounts of the accounts receivable activity.

By having the details of the accounts receivable activity in a subsidiary ledger, a company can better control its financial information. For example, the credit manager and others in the credit department of a company will have access to any and all of the credit sales information through the subsidiary ledger without having access to any other account in the company's general ledger.

An accounts payable subsidiary ledger is an accounting ledger that shows the transaction history and amounts owed for each supplier from whom the business receives credit for purchases. The balance in the customer accounts is periodically reconciled with the accounts payable (AP) balance in the general ledger to ensure accuracy. The AP subsidiary ledger is also commonly referred to as the AP subledger or subaccount.

IV) Discuss the subsidiary ledger/control account relationship.

A general ledger contains all balance sheet and income statement accounts. A general ledger controlling account represents a summary of transactions recorded in a subsidiary ledger. In turn, a subsidiary ledger is a means to document the individual transactions that make up the general ledger controlling account balance. The subsidiary ledger provides an opportunity to better monitor the individual transactions of a particular controlling general ledger account. Control accounts commonly supported by subsidiary ledgers include the accounts receivable and accounts payable accounts.

V) Discuss proving the ledgers or balancing the subsidiary ledgers to the trial balance.

To prove that all entries into the general ledger have been properly recorded, the accountant may prepare a trial balance. This informal document lists all accounts in the ledger and the debit or credit balances of each. During this process, the credit balances are added together and the debit balances are added together. The two amounts should be the same. Note that if a transaction is inadvertently omitted from the original journals, the trial balance may look correct but still contain errors. However, when the total balance of all credit accounts is the same as that of all debit accounts, this proves that the debits and credits as recorded in the general ledger are equal.

VI) Discuss the use of computer technology in accounting such as off-the-shelf programs like QuickBooks or Sage 50.

Accountants use technology to achieve results in business as below:

To prepare financial statements: no accountant in this modern day and time still uses manual ledger to prepare financial statement. At the very least, basic simple spreadsheet is used to keep and maintain books of accounts and then extract the financial statement from it. Technology has made the process of preparing financial statement as simple as inputting data and then clicking a single button. ERP SAP system for example will automatically generate accounting report by the click of few buttons.

To give financial advice: many accountants now deliver financial servicesand advice to their clients over the internet. The explosion in the number of accounting and financial Apps that are at the disposal of people even makes this medium of delivering financial and accounting services even more attractive.

To give access to their clients: accountants use the internet and technology to give clients easy access to their information on demand. Take cloud accounting services as an example of where accountants let their clients remotely use accounting software that they could not have otherwise afforded to buy.

For forensic analysis: accountants that specialise in the investigative arm of accounting use technology for the purpose of preparing forensic accounting information. This role of accountants is very important in the overall judicial system as accountants use technology to prepare financial information that will be admissible in the court of law.

Filing financial details with the authorities: many regulatory authorities are now requiring companies to file their annual reports in formats that are readable by machines without the intervention of humans. This move has given rise to the use of XBRL in filing financial details.

To manage clients relationship: clients are constantly demanding more from their accountants on a daily basis to the extent that it is almost impossible for the accountant to respond to the demands of these clients without leveraging on the automotive power of computer and IT. Accountants for example can use features in Xerox (online accounting software) to grant remote access to their clients. The use of computer in this manner by an accountant goes a long way in improving the customer satisfaction thereby taking the accountant-client relationship to a higher level.

For information processing: the baseline use of technology by accountants is to process raw data into information that is readily available for use by decision makers. Accounting software has features that lets an accountant process large amount of information quickly and reduces the number of errors made.

For marketing and socialization purposes: accountant use social media which is based on technology to socialise, network and connect to other accounting professionals. Accounting forums for example serve as a place where both accountants and aspiring accountants share knowledge on an informal basis. If you are an accountpreneur, you have to use technology to market your accounting services.

VI) Explain how to compute sales tax owed for a business.  

Each time a business makes a sale, the business must charge a sales tax and pay the sales tax to the authorities. Assume that the sales tax in Houston is 8.25 percent--the maximum allowed. Gross profit equals sales minus cost of goods sold. To calculate sales tax, the company must first add back cost of goods sold, then multiply by the tax rate.

1. Determine the company's gross profit and cost of goods sold. Cost of goods sold is subtracted from sales to determine gross profit. For example, a company has a gross profit of $20,000 and a cost of goods sold of $40,000.

2. Add cost of goods sold to the gross profit. In our example, $20,000 plus $40,000 equals sales of $60,000.

3. Multiply the sales by the sales tax rate. For Houston, the sales tax rate is 8.25 percent. In our example, $60,000 times 8.25 percent equals a sales tax of $4,950.

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