Accounting Information system

• Transactions


  Business activities that involves money
• Cash Transactions

  Payment is made at the same time or immediately during a cash sales or purchase
• Credit Transactions


  Payment is delayed or postponed during a credit sale or purchase.
• Accounting cycle: Stage 1

  Identify and record: Source docs are used to record transactions in the journal and the journals entries are posted to the ledger. Recorded daily.
• Accounting cycle: Stage 2

  Adjust (checking): The ending balances of ledger accounts are listed in a trail balance. Any adjusting entries are recorded in the journal and posted to the ledger. Accounts adjusted at least one in a financial year.
• Accounting cycle: Stage 3


  Report: Based on the adjusted trail balance, the financial statements are prepared. Reports are prepared at least once a year
• Accounting cycle: Stage 4

  Close: After the financial statements are finalised, income, expenses, income summary, drawings and dividends accounts are closed by first passing journal entries before being posted to the ledger accounts are close once at the end of the financial year.
• Accounting info system


  a system that a business uses to collect, store and process accounting data
• Objectivity Theory

  Accounting information recorded must be supported by reliable and verifiable evidence so that financial statements will be free from opinions and biases.
• Historical theory


  Transactions should be recorded at their original costs
• Receipt


  (receive money) Acknowledges payment received from customers immediately after the business has sold goods or provided services
• Remittance advice

  Informs credit supplier that payment by cheque has been made for a specific invoice
• Invoice


  (on credit— buy/sell) Informs credit customers of the amount owed after the business sold goods or provided services on credit
• Credit note


  (returns) Reduces the amount owed by credit customers:

  - who were previously overcharged

  - after goods were returned
• debit note


  (undercharged) Increases the amount owed by credit customers who were previously undercharged
• Payment voucher


  (pay money) Processes payment to credit suppliers:

  - must be approved by authorised personnel

  - must be supported by original supplier's invoice
• Bank statement

  Checks and tallies against the business records of its cash at bank account.