chapter 2
Cards (51)
- process most of the firm’s economic activity: the expenditure cycle,the conversion cycle, and the revenue cycle. These cycles exist in all types of businesses—both profit-seeking and not-for-profit.
- Business activities begin with the acquisition of materials, property, and labor in exchangefor cash
- is composed of two major subsystems: the production system andthe cost accounting system. The production system involves the planning, scheduling,and control of the physical product through the manufacturing process. This includesdetermining raw material requirements, authorizing the work to be performed andthe release of raw materials into production, and directing the movement of the work-inprocess through its various stages of manufacturing.
- Firms sell their finished goods to customers, which involves processing cash sales, credit sales, and the receipt of cash following a credit sale.
- This section describes the purpose of each type of accounting record used in transaction cycles.
- provides evidence of an economic event and may be used to initiate transaction processing.
- are used to capture and formalize transaction data that the transaction cycle needs for processing. created at the beginning
- are the result of transaction processing rather than the triggering mechanism for the process. For example, a payroll check
- are product documents of one systemthat become source documents for another system.
- a record of a chronological entry. At some point in the transaction process,when all relevant facts about the transaction are known, the event is recorded in a journalin chronological order.
- are used to record specific classes of transactions thatoccur in high volume. Such transactions can be grouped together in a special journal andprocessed more efficiently than a general journal permits.
- Firms use the general journal to record nonrecurring, infrequent, anddissimilar transactions.
- a book of accounts that reflects the financial effects of the firm’s transactionsafter they are posted from the various journals.
- summarizes the activity for each of the organization’s accounts.
- are kept in various accounting departments ofthe firm, including inventory, accounts payable, payroll, and accounts receivable. Thisseparation provides better control and support of operations.
- for tracing transactions from source documents to the financial statements.
- generally contains account data. The general ledger and subsidiary ledgers are examples of master files. Data values in master files are updated fromtransactions.
- is a temporary file of transaction records used tochange or update data in a master file. Sales orders, inventory receipts, and cash receiptsare examples of
- stores data that are used as standards for processingtransactions. For example, the payroll program
- contains records of past transactions that are retained forfuture reference. These transactions form an important part of the audit trail.
- are physical resources (automobiles, cash, or inventory), events (ordering inventory, receiving cash, shipping goods), and agents (salesperson, customer, or vendor) about which the organization wishes to capture data.
- a graphical representation of a system that describes the physical relationships between its key entities.
- is used to depict the elements of a manual system, including accounting records (documents, journals, ledgers,and files), organizational departments involved in the process, and activities (both clericaland physical) that are performed in the departments.
- portray the computer aspects of a system. They depict the relationships between input (source) data, transaction files, computer programs, master files, andoutput reports produced by the system.
- permits the efficient management of a large volume of transactions.
- shows the relationship between two computer programs, the files they use, and the outputs they produce.
- are used to reveal the internal structure of the records that constitute a file or database table.
- process transactions individually at the moment the event occurs.As records are not grouped into batches, there are no time lags between occurrence andrecording.