POA 03

• Information System

  • An _ _ is a collection of people, procedures, software, hardware and data which works together to provide information essential to running an organizations.
• Accounting Information System

  • An _ _ _ which will generate reliable financial information needed by the decisionmakers in a timely manner.
• Accounting Information System

  • An _ _ _ is the combination of personnel, records and procedures that a business uses to meet its need for financial information.
• accounting manual

  • An _ _ that specifies the policies and procedures to be followed in accumulating information within the accounting information system.
• ACCOUNTING CYCLE:

  • The Accounting Process
  • Accounting Information
  • Decisions Makers
  • Economic Activities
• Computer-Based Transaction System

  • A _ _ _ system maintains accounting data separately from other operating data.
• Database Systems

  • _ _ reduce inefficiencies and redundancies that often exist in transaction-based systems.
• Financial Position

  • Controlled by the enterprise
  • Past events
  • Obligations
  • Transfer economic benefits
  • Past transactions or events
  • Complementary nature of assets and liabilities
• Controlled by the enterprise

  • Control is the ability to obtain the economic benefits and restrict the access of others.
• Past events

  • The event must be past before an asset can arise.
• Future economic benefits

  • These are evidenced by the prospective receipt of cash. This could be cash itself, an account receivable or any item which may be sold.
• Obligations

  • These may be legal or not.
• Transfer economic benefits

  • This could be a transfer of cash, or another property, the provision of a service or the refraining from activities which could be otherwise be profitable
• Past transactions or events

  • refer to discussion in assets.
• Complementary nature of assets and liabilities

  • As should be evident from the above, assets and liabilities are seen as mirror images of each other
• Equity

  • Is the residual interest in the assets of the enterprise after deducting all its liabilities.
• The Accounting Equation

  • Assets = Liabilities + Owner’s Equity
• debit derive from the latin debere

  credit derive from the latin credere
• (4) The Effects of Transactions:

  • Source of Assets
  • Exchange of Assets
  • Use of Assets
  • Exchange of Claims
• Source of Assets

  • An asset account increases and a corresponding claims (liabilities or owner’s equity) account increases.
• Exchange of Assets

  • One asset account increases and another asset account decreases.
• Use of Assets

  • An asset account decreases and a corresponding claims (liabilities or equity) account decreases
• Exchange of Claims

  • One claims (liabilities or owner’s equity) account increases and another claims (liabilities or owner’s equity) account decreases.