Basic

Basic Concepts
Concepts of
of AIS
AIS
Manual Accounting Systems
Perform each step in the accounting cycle by hand.

Satisfactory in a company with a low volume of transactions.

Must understand manual accounting systems to understand

computerized accounting systems.

LO 1 Identify the basic concepts of an accounting information system.

Subsidiary
Subsidiary Ledgers
Ledgers
Used to keep track of individual balances.
Two common subsidiary ledgers are:
1. Accounts receivable (customers’)

2. Accounts payable (creditors’)

Each general ledger control account balance must

equal the composite balance of the individual accounts
in the related subsidiary ledger.

LO 2 Describe the nature and purpose of a subsidiary ledger.

Subsidiary
Subsidiary Ledgers
Ledgers
Relationship of general ledger and subsidiary ledgers Illustration 7-3
Subsidiary
Subsidiary Ledgers
Ledgers
Advantages of Subsidiary Ledgers

1. Show in a single account transactions affecting one

customer or one creditor.

2. Free the general ledger of excessive details.

3. Help locate errors in individual accounts.

4. Make possible a division of labor.

LO 2 Describe the nature and purpose of a subsidiary ledger.

Special
Special Journals
Journals
Used to record similar types of transactions.
Illustration 7-5

If a transaction cannot be recorded in a special journal,

the company records it in the general journal.
LO 3 Explain how companies use special journals in journalizing.
Special
Special Journals
Journals
Review Question
Each of the following is a subsidiary ledger
except the:
a. accounts receivable ledger.
b. accounts payable ledger.
c. customer’s ledger.
d. general ledger.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Sales Journal Illustration 7-6

Under a perpetual inventory system, one entry at selling price in Sales

Journal results in a debit to Accounts Receivable and a credit to Sales.
Another entry at cost results in a debit to Cost of Goods Sold and a
credit to Merchandise Inventory.

LO 3 Explain how companies use special journals in journalizing.

 Illustration 7-7
Special
Special Journals
Journals
POSTING THE SALES JOURNAL

Companies make daily postings

from the sales journal to the
individual accounts receivable
in the subsidiary ledger.

LO 3 Explain how companies use special journals in journalizing.

 Illustration 7-7
Special
Special Journals
Journals
POSTING THE SALES JOURNAL

Posting to the general ledger is

done monthly.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Advantages of Sales Journal

One-line entry for each sales transaction saves time.

Only totals, rather than individual entries, are posted to

the general ledger.

A division of labor results.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Cash Receipts Journal Illustration 7-9

In the cash receipts journal, companies record all receipts of cash.

The posting of the cash receipts journal is similar to the posting of
the sale journal. See complete Illustration 7-9 in the text.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals

$3,200

LO 3 Explain how companies use special journals in journalizing.

 Special
Special Journals
Journals

June 1 J. Darby
Lenninger
Farley

Deering & Son

Merchandise
inventory

Grinnell Bros.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Review Question
Cash sales of merchandise are recorded in the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. sales journal.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Review Question
Which of the following is not one of the credit
columns in the cash receipts journal:
a. Other accounts.
b. Accounts payable.
c. Accounts receivable.
d. Sales.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals Illustration 7-13

Purchases Journal

In the purchases journal,

companies record all purchases of
merchandise on account.

LO 4 Indicate how companies post a multi-column journal.

Special
Special Journals
Journals Illustration 7-13

Purchases Journal

LO 4 Indicate how companies post a multi-column journal.

Special
Special Journals
Journals
Review Question
All of the following are advantages of using
subsidiary ledgers except they:
a. show transactions affecting one customer or
one creditor in a single account.
b. free the general ledger of excessive details.
c. eliminate errors in individual accounts.
d. make possible a division of labor.

LO 3 Explain how companies use special journals in journalizing.

Special
Special Journals
Journals
Cash Payments Journal Illustration 7-16

In a cash payments (cash disbursements) journal, companies

record all disbursements of cash.
The procedures for posting the cash payments journal are similar to
those for other journals.
LO 4 Indicate how companies post a multi-column journal.
Special
Special Journals
Journals
Review Question
Credit purchases of equipment or supplies other
than merchandise are recorded in the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. purchases journal.

LO 4 Indicate how companies post a multi-column journal.

Special
Special Journals
Journals
Review Question
Cash payments of merchandise are recorded in
the:
a. cash payments journal.
b. cash receipts journal.
c. general journal.
d. purchases journal.

LO 4 Indicate how companies post a multi-column journal.

Special
Special Journals
Journals
Effects of Special Journals on the General Journal

Special journals substantially reduce the number of entries

that companies make in the general journal.

Only transactions that cannot be entered in a special journal

are recorded in the general journal.

Also, correcting, adjusting, and closing entries are made in the

general journal.

LO 4 Indicate how companies post a multi-column journal.