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Accounting

Information Systems

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Main Objective of Accounting

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Accounting Information System Terminology

Basic Accounting Terms


Event triggering Trial Balance
recognition
Transaction Adjusting entries
Account Closing entries
Journal Financial Statements
Ledgers Nominal account
Posting Real account

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Manual & Electronic Accounting Info Systems

Transform To Internal &


Report
Collect data data into External
information
information Stakeholders
Basis of Accounting

FASB requires the


Accrual Basis of Accounting

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Accrual Accounting Causes Accruals & Deferrals

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Refresher Videos

• If you need more help understanding the


difference between Cash Basis and Accrual
Basis accounting, view the following videos
that have accurate closed captioning and
transcripts:
– Cash Basis of Accounting
– Accrual Basis of Accounting
– Comparing Accrual and Cash Basis Accounting

• To find the closed captioning and a transcript:


• Click Transcript under the title of the video or the
Closed Captioning symbol “CC” under the time
line

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Sample Chart of Accounts

All Accounting
Systems have a
Chart of Accounts.
Debits & Credits
The Accounting Equation

Assets = Liabilities + Equity

Assets – Liabilities = Equity


Net Assets = Equity

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The T-Account

Consider downloading
the T-Account
Templates document in
Course Resources

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T Account Demo

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T Account Demo, con’t

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Accounting Cycle

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Step 1: Analyze Transactions Using Source Documents

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Step 2: Journalize Transaction

From Source
Document
To
General Journal

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Correct Format of Journal Entries

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Refresher Video

• If you need more help understanding how


to prepare journal entries, view the
following video that has accurate closed
captioning and transcripts:
– Journal Entries
• To find the closed captioning and a
transcript:
• Click Transcript under “…More” or the Closed
Captioning symbol “CC” under the time line

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Step 3: Post Journal Entry to Ledger

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Refresher Video

• If you need more help understanding how


to post journal entries to the ledger, view
the following video that has accurate
closed captioning and transcripts:
• Posting to the General Ledger
• To find the closed captioning and a
transcript:
• Click Transcript under “…More” or the Closed
Captioning symbol “CC” under the time line

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Step 4: Prepare an Unadjusted Trial Balance

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Prepare an Adjusted Trial Balance

The purpose of all Trial Balances is to ensure

Total Debits

MUST ALWAYS EQUAL

Total
Credits

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Refresher Videos

• If you need more help understanding how to


prepare a Trial Balance, view the following
video:
– Trial Balance
• Note: this video was in a hidden folder on
YouTube. Dave Burrell, the owner of
NotePirate.com, gave special permission for us to
view this video.

• To find the closed captioning and a transcript:


• Click Transcript under the title of the video or the
Closed Captioning symbol “CC” under the time
line

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Refresher Videos

• If you need more help understanding


Adjusting Entries, view the following videos
that have accurate closed captioning and
transcripts:
• Adjusting entries for:
– Accrued revenues
– Accrued expenses
– Prepaid Assets
– Unearned Revenue
– Amortization and Depreciation

To find the closed captioning and a transcript:


• Click Transcript under “…More” or the Closed
Captioning symbol “CC” under the time line

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Refresher Videos

• If you need more help understanding how


to prepare an Unadjusted Trial Balance,
view the following video that has accurate
closed captioning and transcripts:
• Prepare an Adjusted Trial Balance

• To find the closed captioning and a


transcript:
• Click Transcript under “…More” or the Closed
Captioning symbol “CC” under the time line

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Sequence of Preparing Financial Statements

Income Statement

Statement of Shareholder Equity

Balance Sheet

Statement of Cash Flows

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Prepare Financial Statements: Balance Sheet

Balance Sheet in Account form

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Step 9: Prepare Closing Entries

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More on the Closing Process

HINT: NEVER Close the Retained Earnings


Account of an operating company

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4 Steps to Close the Books

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Refresher Videos

• If you need more help understanding how


to prepare Closing Entries, view the
following video that has accurate closed
captioning and transcripts:
• How to Prepare Closing Entries

• To find the closed captioning and a


transcript:
• Click Transcript under “…More” or the Closed
Captioning symbol “CC” under the time line

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Step 11: Prepare Post-Closing Trial Balance

The sole purpose of preparing a Trial Balance is to ensure


Total Debits = Total Credits
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Account Types

Permanent
Temporary
(aka Real)
Reversing Entry Example

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Reversing Entries: Another Example

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Refresher Videos

• If you need more help understanding how


to prepare Reversing Entries, view the
following video that has accurate closed
captioning and transcripts:
– Reversing Entries
– Note: this video has no audio other than
background music

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Critical Thinking Exercise

We will learn more about preparing the four


required financial statements throughout this
course. For now, in a manual system, know
that accountants prepare the Financial
Statements after preparing the Closing
Entries. This always struck me as odd.

Question:
In a manual accounting system, why does preparing
the financial statements occur before closing entries
are journalized and posted?
Important Note

All videos in this course are optional


resources that not required to learn the
course content or meet the course
objectives and competencies.

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• Complete and submit all assignments by the due date stated
in the syllabus Course Schedule.
• After completing the activities in this presentation, please ask
questions in class if you need further clarification.
– Failure to ask for help typically results in poor grades
– Be proactive about posting as many questions as needed to fully
understand the course content.

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