Professional Documents
Culture Documents
SUBMITTED DATE:21-May-13
DEFINITION:The collection, storage and processing of financial and accounting data that is used by decision makers. An accounting information system is generally a computer-based method for tracking accounting activity in conjunction with information technology resources. The resulting statistical reports can be used internally by management or externally by other interested parties including investors, creditors and tax authorities.
Internal Parties
AIS
External Parties
The AIS interacts with external parties, such as customers, vendors, creditors, and governmental agencies. The AIS also interacts with internal parties such as employees and management.
The interaction is typically two way, in that the AIS sends information to and receives information from these parties.
Modern businesses need to generate and communicate information for two pur-poses:
Satisfying the needs of those external to the business, for example, shareholders, both actual and potential; And for internal!, managerial purposes.
IMPORTANCE:Management
The most important use of accounting data is to communicate meaningful information, allowing management to make good decisions. To be effective, accounting information must make sense and be understood; or else, it is just a list of numbers with no real significance.
Investors
Another important user of accounting information is the investor, who wants to know how a business is doing financially. Usually this type of information is communicated through standard reports, such as balance sheets and income statements, compiled using generally accepted accounting principles.
Government
Accounting information needs to be communicated properly to government entities in the case of taxes. For example, Texas requires sales and use tax on certain items and accounting information must be presented a certain way to be significant.
Banks
Banks may want to be appraised of financial situation of businesses, making communication of accounting matters a priority in many firms. In case of bank loans, there may be periodic reports using accounting information. Banks are usually interested in cash flows statement.
Considerations
The best way to communicate any accounting information is to do it in writing and in a report format with line descriptions on the left side of the pages, columns headed by a date or description, and a report title. Accounting reports are for a specific period or date. Make sure that any necessary schedules or backup documentation is available in case of questions. To proper communicate accounting information, reports should be organized with the most summarized version on top and others following it at the bottom. Be sure all reports are stapled with no pages flying around.
Data Communications
System Components
There are five basic components in any data communication network (whether it is the Internet, a LAN, a WAN, or a VAN):
1 The sending device 2 The communications interface device 3 The communications channel 4 The receiving device 5 Communication software
Interface Devices:An interface device (IDF) is a hardware component or system of components that allows a human being to interact with a computer, a telephone system, or other electronic information system. There are six basic communication interface devices that are used in most networks: 1 Network interface cards 2 Modems 3 Remote access devices 4 Hubs 5 Switches 6 Routers
Communications Software:Communication software is an application or program designed to pass information from one system to another. Such software provides remote access to systems and transmits files in a multitude of formats between computers. Communications software manages the flow of data across a network. It performs the following functions: Access control Network management Data and file transmission Error detection and control Data security
Communications Channels:A medium through which a message is transmitted to its intended audience, such as print media or broadcast (electronic) media. A communications channel is the medium that connects the sender and the receiver. Standard telephone lines Coaxial cables Fiber optics
2. CHART OF ACCOUNTS
The Chart of Accounts (COA) is the backbone of the financial system. It provides the organizing framework for both financial and management reporting within the financial system. The COA structure is a string of informational fields that identifies, segregates, and categorizes transactional and budget data.
DEFINITION:An identifier and a heading explaining text title and coded by account type. In computerized accounting systems with computable quantity accounting, the accounts can have a quantity measure definition.
IMPORTANCE OF (COA) FOR MANAGEMENT REPORTING AND ANALYSIS:There are two main reasons why the chart of accounts may help or hinder your management/operational reporting: The chart of accounts determines how much transactional detail is available for
analysis. For example, If all your telecommunication costs are lumped into one account when invoices are processed, you wont be able to single out cell phone costs as a distinct item to be monitored or analyzed. The For example, If your accounts are set up without a divisional structure you obviously wont be able to analyses results by division. chart of accounts also determines how you can slice your business for analysis.
Purpose of Chart of Accounts:The General Ledger is used to record and store each individual account and their transactions. The Chart of Accounts is the basis of any accounting system. The purpose of the Chart of Accounts is to classify each financial transaction and record it with reference to appropriate business dimension enabling the users to select or extract the financial data through account inquiry screens or reports. Finally enabling reporting on (or enquire about) the sum total of financial transactions at various levels on the chart.
SAMPLE OF SMALL BUSINESS CHART OF ACCOUNT:In this sample all accounts are written with account number and account title: SHORT CHART OF ACCOUNTS:
Normally, the order of the listing of the asset and liability accounts is based on liquidity. The most liquid accounts are listed first. Thus, when listing assets, cash is listed before accounts receivable which comes before inventory. Likewise for liabilities, accounts payable comes before notes payable because accounts payable are normally paid before notes payable.
Revenue
o o
Expenses
o o o
Revenue and expense accounts tend to follow the standard of first listing the items most closely or directly related to the operations of the business. The revenues (sales) resulting from normal operations are listed before revenue or income resulting from non-operating sources. Likewise, the operating costs and expenses that are most closely related to the operations of the business are listed before the non-operating expenses. Cost of Sales is listed first followed by operating expenses and then the non-operating expenses..
To maintain chart of accounts following steps are required which are given bellow;
Step 1;
In first step you open Peachtree software and you have this window on your screen.
Step 2;
If you see on the top of this window you have seen a word MAINTAIN click on this MAINTAIN menu then you have this window on your screen which is below.
Step 3;
In the third step you have to choose the head named CHART OF ACCOUNTS written in the list of maintain menu. When you choose the head chart of accounts you have this window on your screen
Step 4;
After choosing head, Chart of accounts as you that you have the above window on your screen now maintaining chart of accounts start.
In this window you can see a CIRCLE. In this circle you can see that Account ID is written and after this a blank box is in this window it means that you have to write Account ID before this.
Step 5;
When you enter your account ID in that blank box then you move on to the next step which is Description. Which is about the account that what type of account it is whether it is cash, bills receivables, inventory or any other.
In the above window you can see another circle which is on description you have to write here description of account.
Step 6;
In the 6 step you have to tell about the account type that what of account is which we are maintain.
After entering account type press ALT S and your chart of account had saved. Repeat all this steps and maintain your all chart of accounts.
Note;
We can see our saved chart of accounts by clicking on this circled button.
For delete any existing chart of account you have to search that account first. Write account ID, description and account type then click on this DELETE button.
When you click on DELETE button the software wants confirmation from you to delete this account if you want to delete it click on YES and if you dont click on NO. If you want to change ID of any account you have to click on CHANGE ID write on the top of this software.
Just like the deletion process in this you again have to write account ID, description and account type and click on change ID.
This window appears on your screen enter current account ID and new account ID in the circled portion and then click on OK if you want to change the previous ACCOUNT ID.
1. Accounts Payable:
In this module the company makes the entry of the bills that it has to pay and the money that it owes.
2. Accounts Receivable:
In this module the company or the businesses enter the money that it receives.
3. Purchase order:
This modules deals with the orders that the company makes regarding the inventory.
4. Sales Order:
It deals with the customers orders that are supplied by the company.
5. General ledger:
This module forms the companys account books.
6. Billing:
This module is used to record the companys invoices of its clients or customers.
7. Cash Book:
This is used by the company to record its collection as well as payments.
8. Stock/Inventory:
This module is used by the company to have a control on its inventory.
1. Payroll:
In order to record the salary of the employees as well as its wages and other related taxes, the businesses use this module
2. Timesheet:
This module is used by the people like attorneys as well as the consultants of the company in order to record the information regarding the time spent on the work. It is then billed to the clients
4. Debt collection:
The module is used to record the payments that are due from the clients.
5. Expense:
This module is used to record the business related expenses of the company
6. Purchase Requisition:
Here the requests for the purchase orders are made, approved and then tracked.
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