Professional Documents
Culture Documents
Coding, General
Ledger, and
Financial Reporting
Post entries to the
ledger
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Western are trademarks used herein under license
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Objectives for Chapter 8
Features, advantages, and
disadvantages of various coding
schemes
Operational features of the GLS, and FRS
Principle operational controls governing
the GLS and FRS
A1000
Block codes
1001 11000-00 Sequential codes
1002 Group codes
1003 TX
Alphanumeric codes
1004
Category-Item-Color Mnemonic codes
444000-0010-00355
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Sequential Codes
Represent items in sequential order
Common uses:
Pre-number source documents
Sales orders, purchase orders, checks,
receiving reports
Allows AIS to track each transaction
processed and to identify any out-of-
sequence documents
Disadvantages:
Difficult to insert more codes
Provides arbitrary (subjective) information
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Block Codes
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Example of Chart of A/Cs
(block codes)
Assets Revenue
10000-00 to 19999-00 40000-00 to 49999-00
Liabilities COGS
20000-00 to 29999-00 50000-00 to 59999-00
Equity Expenses
30000-00 to 39999-00 60000-00 to 69999-00
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Group Codes
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Mnemonic Codes
Sales Inventory
Order Control
General
Ledger
System
Cash Payroll
Receipts (GLS)
Cost Cash
Accounting Disbursements
Accounts
Payable
Orange bubbles are
PO commonly used modules,
(Inventory)
but we dont use in G.P.
GLS Database
general ledger master file
primary FRS file based on chart of accounts
general ledger history (archive) file
used for comparative financial statements
journal voucher (transaction) file
all journal vouchers of current period
journal voucher history (archive) file
journal vouchers of past periods for audit trail
budget master file
budget data by responsibility centers for MRS
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The Financial Accounting Process
Generic Model
Adjusting and
Financial closing
statements
The Financial Accounting Process
Great Plains
Adjusting/
Financial Trial Correcting Trial
statements balance balance
GLS Reports
Chart of Accounts: coded listing of accounts
General Ledger Analysis
Listing of transactions
Allocation of expenses to cost centers (if any)
Comparison of account balances from prior periods
Trial balance
Financial Statements
Managerial Reports
Analysis of Sales
Analysis of Cash
Analysis of Receivables
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Potential Exposures
(Risks) in GL/FRS
Improperly prepared journal entries
Unposted journal entries
Debits not equal to credits
Subsidiary ledger(s) not equal to general
ledger control accounts
Inappropriate access to general ledger
Poor audit trail
Lost or damaged data
Incorrect account balances because of
unauthorized or incorrect journal
vouchers
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GL/FRS Control Issues
Transaction Authorization -
journal vouchers must be properly
authorized by responsible manager
at source dept.
Segregation of Duties - general
Manual
ledger clerks should NOT: System
have recordkeeping responsibility for
special journals/subsidiary ledgers
prepare journal vouchers
have custody of physical assets19
GL/FRS Control Issues (cont)
Access Controls:
Direct - journal vouchers should only be
posted by authorized individuals
Indirect - source documents should be
Manual
prenumbered and a log kept System
Accounting Records - should be
able to trace a source document
from inception to impact on fin.
statements and vice-versa
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Audit Trail
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GL/FRS Control Issues (cont)
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GL/FRS Using Database
Technology
Advantages:
immediate update and reconciliation
timely information
even more timely if real-time processing
Removes separation of transaction authorization and
processing
Compensating control: detailed journal voucher
listing and account activity reports
Centralized access to accounting records
Controls: Passwords and authorization tables
The End
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