Professional Documents
Culture Documents
Accounting Systems and Internal Controls
Accounting Systems and Internal Controls
Accounting Systems and Internal Controls
Operations Accounting
Independent
check
Elements
Elements of
of Internal
Internal Control
Control
1. Control environment
2. Risk assessment
3. Control procedures
4. Monitoring
5. Information and communication
Clues
Clues to
to Potential
Potential Problems
Problems
Warning signs with regard to people:
1. Abrupt changes in lifestyle.
2. Close social relationships with suppliers.
3. Refusing to take a vacation.
4. Frequent borrowing from other employees.
5. Excessive use of alcohol or drugs.
Clues
Clues to
to Potential
Potential Problems
Problems
Warning signs from the accounting system:
1. Missing documents or gaps in transaction
numbers.
2. An unusual increase in customer refunds.
3. Differences between daily cash receipts and
bank deposits.
4. Sudden increase in slow payments.
5. Backlog in recording transactions.
Manual Accounting
Systems
General
General Ledger
Ledger and
and Subsidiary
Subsidiary Ledgers
Ledgers
General Ledger
A B C D
A B C D
Special Journals
SELLING
Providing services on account
recorded
recordedinin Revenue journal
Receipt of cash from any source
recorded
recordedin
in Cash receipts journal
BUYING
Purchase of items on account
recorded
recordedin
in Purchases journal
Payment of cash for any purpose
recorded
recordedin
in Cash payments journal
The
The Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
1 1
2 2
3 3
4 4
5 5
6 6
All
All sales
sales onon account
account are
are recorded
recorded in in
this
this journal.
journal. Each
Each sales
sales invoice
invoice isis
listed
listed in
in numerical
numerical order.
order.
The
The Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 2
3 3
4 4
5 5
6 6
Performed
Performed services
services on
on credit
credit to
to
MyMusic.com,
MyMusic.com, $2,200.
$2,200.
The
The Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 2
3 3
4 4
5 5
6 6
Notice
Notice that
that only
only one
one line
line isis
required
required to
to make
make the
the entry.
entry.
Posting
Posting from
from the
the Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 2
3 3
4 4
5 5
6 6
To
Toupdate
update the
the MyMusicClub.com
MyMusicClub.comaccount, account,
the
the $2,200
$2,200 debit
debit isis posted
posted to
to the
the accounts
accounts
receivable
receivable subsidiary
subsidiary ledger.
ledger.
Posting
Posting from
from the
the Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 2
3 3
4 4
Accounts Receivable Subsidiary Ledger
5 5
MyMusicClub.com
6 Date Item P.R. Debit Credit Balance 6
2006
Mar. 2 R35 2,200 2,200
Posting
Posting from
from the
the Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 2
3 3
4 4
Accounts Receivable Subsidiary Ledger
5 5
MyMusicClub.com
6 Date Item P.R. Debit Credit Balance 6
2006
Mar. 2 R35 2,200 2,200
Assume
Assume that
that similar
similar entries
entries were
were
journalized
journalized and
and posted
posted during
during the
the
month
month of
of March.
March.
Posting
Posting from
from the
the Revenue
Revenue Journal
Journal
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 6 616 RapZone.com 1 7 5 0 00 2
3 18 617 Web Cantina 2 6 5 0 00 3
4 27 618 MyMusicClub.com 3 0 0 0 00 4
5 31 9 6 0 0 00 5
6 6
On
On March
March 31,
31, the
the revenue
revenue journal
journal isis
totaled
totaled and
and ruled.
ruled.
Posting
Posting the
the Revenue
Revenue Journal
Journal Total
Total
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 6 616 RapZone.com 1 7 5 0 00 2
3 18 617 Web Cantina 2 6 5 0 00 3
4 27 618 MyMusicClub.com 3 0 0 0 00 4
5 31 9 6 0 0 00 5
6 6
Next,
Next, the
the revenue
revenue journals
journals total
total
($9,600)
($9,600) isis posted
posted to
to the
the general
general ledger.
ledger.
Posting
Posting the
the Revenue
Revenue Journal
Journal Total
Total
GENERAL LEDGER
Post. Balance
Date Item Ref. Dr. Cr.
Dr. Cr.
2006
Mar. 1 Balance 3 400 00
GENERAL LEDGER
Post. Balance
Date Item Ref. Dr. Cr.
Dr. Cr.
2006
Mar. 31 R35 9 600 00 9 600 00
Posting
Posting the
the Revenue
Revenue Journal
Journal Total
Total
Revenue Journal Page 35
Invoice Post Accts. Rec. Debit
Date No. Account Debited Ref. Fees Earned Credit
2006
1 Mar. 2 615 MyMusicClub.com 2 2 0 0 00 1
2 6 616 RapZone.com 1 7 5 0 00 2
3 18 617 Web Cantina 2 6 5 0 00 3
4 27 618 MyMusicClub.com 3 0 0 0 00 4
5 31 9 6 0 0 00 5
6 (12)(41) 6
NetSolutions
NetSolutions received
received $400
$400 cash
cash
on
on March
March 11 for
for the
the months
months rent.
rent.
The
The Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
During
During March,
March, NetSolutions
NetSolutions collected
collected
cash
cash from
from three
three customers.
customers.
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
Each
Each account
account underunder Accounts
Accounts
Receivable
Receivable Cr.
Cr. isis posted
posted to
to the
the accounts
accounts
receivable
receivable subsidiary
subsidiary ledger.
ledger.
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
After
After all
all journalizing
journalizing andand posting
posting
to
to the
the accounts
accounts receivable
receivable
subsidiary
subsidiary ledger
ledger for
for the
the month
month isis
complete,
complete, the the columns
columns are are totaled.
totaled.
The
The Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
31 400 7,350 7,750
The
The total
total Cash
Cash Dr.
Dr. column
column
equals
equals the
the total
total of
of the
the two
two
credit
credit columns.
columns.
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
31 400 7,350 7,750
GENERAL LEDGER
Account: Accounts Receivable No. 12
The
The three
three circled
P.R. items
circled
Date Item items are
are Balance
Debit Credit
posted to
to1 the
Balgeneral ledger.
2006
posted
Mar. the general
ledger. 3,400
31 R35 9,600 13,000
Lets
Lets post
post Accounts
Accounts Receivable
Receivable..
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
31 400 7,350 7,750
GENERAL LEDGER
Account: Accounts Receivable No. 12
Date Item P.R. Debit Credit Balance
2006
Mar. 1 Bal 3,400
31 R35 9,600 13,000
31 CR14 7,350 5,650
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
31 400 7,350 7,750
( ) (12)
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
The
The $7,750
$7,750 total
total in
in the
the
Cash
Cash Debit
Debit column
column isis
posted
posted to
to Cash
Cash in
in aa similar
similar
manner.
manner.
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
The
The $400
$400 credit
credit to
to Rent
Rent Revenue
Revenue
could
could have
have beenbeen posted
posted earlier,
earlier, but
but
posting
posting itit at
at the
the same
same time
time as
as other
other
general
general ledger
ledger accounts
accounts isis proper.
proper.
Posting
Posting the
the Cash
Cash Receipts
Receipts Journal
Journal
A
Acompletely
completely posted
posted cashcash
receipts
receipts journal
journal isis shown
shown
in
in the
the next
next slide.
slide.
Posted
Posted Cash
Cash Receipts
Receipts Journal
Journal
CASH RECEIPTS JOURNAL Page 14
Other Accounts
Post Accounts Receivable Cash
Date Account Credited Ref. Cr. Cr. Dr.
2006
Mar. 1 Rent Revenue 42 400 400
19 Web Cantina 3,400 3,400
28 MyMusicClub.com 2,200 2,200
30 RapZone.com 1,750 1,750
31 400 7,350 7,750
( ) (12) (11)
GENERAL LEDGER
Accounts ACCOUNT Accounts Receivable No. 12
Receivable Date Item P.R. Debit Credit Balance
Mar. 1 Bal 3,400
Control 31 R35 9,600 13,000
Account 31 CR14 7,350 5,650
If
If the
the accounts
accounts receivable
receivable
account
account in in the
the general
general ledger
ledger
only
onlyshows
shows summary
summary totals,
totals,
where
whereare arethe
the individual
individual
customer
customerbalances?
balances?
GENERAL LEDGER
Accounts ACCOUNT Accounts Receivable No. 12
Receivable Date Item P.R. Debit Credit Balance
Mar. 1 Bal 3,400
Control 31 R35 9,600 13,000
Account 31 CR14 7,350 5,650
MyMusicClub.com
Date Item P.R. Debit Credit Balance
3/2 R35 2,200 2,200
3/27 R35 3,000 5,200
Accounts 3/28 CR14 2,200 3,000
RapZone.com
Receivable Date Item P.R. Debit Credit Balance
Subsidiary 3/6
3/30
R35 1,750
CR14 1,750
1,750
--
Ledger Web Cantina
Date Item P.R. Debit Credit Balance
3/1 Bal. 3,400
3/18 R35 2,650 6,050
3/19 CR14 3,400 2,650
The
The purchases
purchases journal
journal isis
designed
designed for
for recording
recording all
all
purchases
purchases on
on account.
account.
Journalizing
Journalizing in
in the
the Purchases
Purchases Journal
Journal
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2006
Mar. 3 Howard Supplies 600 600
On March 7, NetSolutions
purchased supplies from Donnelly
Supplies, $420.
Journalizing
Journalizing in
in the
the Purchases
Purchases Journal
Journal
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2006
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
Journalizing
Journalizing in
in the
the Purchases
Purchases Journal
Journal
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2006
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800
Because
On March there
12, isnt
NetSolutions
a special purchased
column for
office
Office
equipment
Equipment from
, thisJewett
purchase
Business
was
recorded under
Systems,
Other
$2,800.
Accounts Dr.
Journalizing
Journalizing in
in the
the Purchases
Purchases Journal
Journal
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2006
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800
19 Donnelly Supplies 1,450 1,450
27 Howard Supplies 960 960
At
At the
the end
end of
of March,
March, all
all columns
columns are
are totaled
totaled
and $6,230
$6,230 == $3,430
$3,430 ++ $
$ 2,800
2,800
and equality of debits and credits isis verified.
equality of debits and credits verified.
Posting
Posting the
the Purchases
Purchases Journal
Journal
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2006
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800
19 Donnelly Supplies 1,450 1,450
27 Howard Supplies 960 960
31 6,230 3,430 2,800
GENERAL LEDGER
ACCOUNT Accounts Payable No. 21
Date Item P.R. Debit Credit Balance
Mar. 1 Bal 1,230
31 P11 6,230 7,460
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2003
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 2,800
19 Donnelly Supplies 1,450 1,450
27 Howard Supplies 960 960
31 6,230 3,430 2,800
(21)
GENERAL LEDGER
ACCOUNT Accounts Payable No. 21
Date Item P.R. Debit Credit Balance
Mar. 1 Bal 1,230
31 P11 6,230 7,460
PURCHASES JOURNAL Page 11
Accts. Other
Post Payable Supplies Accounts Post
Date Account Credited Ref. Cr. Dr. Dr. Ref. Amount
2003
Mar. 3 Howard Supplies 600 600
7 Donnelly Supplies 420 420
12 Jewett Bus. Sys. 2,800 Off. Equip. 18 2,800
19 Donnelly Supplies 1,450 1,450
27 Howard Supplies 960 960
31 6,230 3,430 2,800
(21) (14)
Jewett Business
Payable Grayco Supplies
Date Item P.R. Debit Credit Balance
SystemsSubsidiary
also has Mar 1 Bal. 1,230
15 CP7 1,230 0
a zero balance, so
Ledger --
Howard Supplies
that account was Date Item P.R. Debit Credit Balance
Mail invoice to
customer
The
The Revenue
Revenue and
and Collection
Collection
Cycle
Cycle in
in QuickBooks
QuickBooks Continued
Continued
From Exhibit 10, page 203 of textbook
The
The Revenue
Revenue and
and Collection
Collection
Cycle
Cycle in
in QuickBooks
QuickBooks Continued
Continued
From Exhibit 10, page 203 of textbook
Advanced
Advanced Areas
Areas Where
Where the
the
Internet
Internet is
is Being
Being Used
Used for
for
Business
Business Purposes
Purposes
Supply chain management (SCM)
Customer relationship management (CRM)
Product life-cycle management (PLM)
Chapter 5
The
The End
End