Generated By Camscanner From Intsigcom

Generated By Camscanner From Intsigcomgenerated By Camscanner From In

Identify each statement as true or false regarding accounting information systems, including the scope of the system, benefits versus costs, and user considerations.

Determine in which ledger (general or subsidiary) each specified account appears.

Identify the appropriate journal for recording various transactions.

For Rauch Computer Components Inc., categorize columns in the cash receipts journal based on posting frequency.

Calculate the beginning balance in the Valdez Company subsidiary account for Pennington Company based on January transactions.

Record transactions during May 2014 for R. Santiago Co. into the correct journals; then, prepare a multiple-column cash receipts journal capturing these entries.

Compute the month-end balances of specific accounts for Hulse Company based on the provided totals and transactional data for January 2014.

Paper For Above instruction

The management and design of accounting information systems (AIS) are crucial components of modern business operations, influencing accuracy, efficiency, and compliance. This paper explores various aspects of AIS, including their scope, benefits, user considerations, ledger classifications, transaction recording, journal utilization, and account balance computations, exemplified through hypothetical companies’ data and scenario analyses.

Understanding the Scope and Benefits of Accounting Information Systems

At its core, an AIS encompasses all steps of the accounting cycle—beginning from transaction recording, journalizing, posting to ledgers, and culminating in the preparation of financial statements, as well as the supporting documents and records that evidence these transactions (Romney & Steinbart, 2018). The system's scope is comprehensive, integrating manual and computerized processes to streamline the flow of financial data (Hall, 2017). Accurate classification and recording of accounts, whether in the general ledger or subsidiary ledgers, moreover, provide detailed insights into specific account activities—such as receivables and payables—supporting managerial decision-making (Weygandt, Kimmel, & Kieso, 2019).

The benefits derived from AIS include improved accuracy, efficiency, compliance, and data security (Gelinas, Sutton, & Hastings, 2017). However, these benefits should outweigh the costs involved in designing, installing, and maintaining the system. It is a fallacy to assume that benefits need not outweigh costs; rather, organizations must evaluate the cost-benefit ratio to ensure optimal resource utilization (Garrison, Noreen, & Brewer, 2018). A cost-effective AIS is also adaptable to changing operational and regulatory environments, which underscores the need for flexibility in system design (Romney & Steinbart, 2018).

Considerations for System Designers and Users

Designers of AIS must consider the diverse needs and knowledge levels of various user groups—including management, accountants, auditors, and external regulators (Hall, 2017). This heterogeneity necessitates designing user-friendly interfaces, accurate reporting functionalities, and secure access controls (Gordon & Loeb, 2002). The interface should facilitate ease of data input and retrieval, while security features prevent unauthorized access or data breaches (Bierstaker, Brody, & Pacini, 2001). Furthermore, AIS must be flexible enough to accommodate organizational growth, new reporting standards, and emerging compliance requirements (Romney & Steinbart, 2018).

Ledger Classifications and Transaction Recording

In ledger classifications, accounts such as Rent Expense are typically shown in the general ledger, reflecting the company's overall operational expenses. In contrast, accounts like Accounts Receivable—Cabrera are recorded in subsidiary ledgers because they pertain to individual customers (Kieso, Weygandt, & Warfield, 2013). Similarly, Notes Payable and Accounts Payable—Pacheco are common to the general ledger but may also have subsidiary records to track individual creditor balances (Weygandt et al., 2019).

Transactions are recorded in various journals depending on their nature. For example, cash sales and cash purchases are typically recorded in the cash receipts and cash disbursements journals, respectively. Owner withdrawals are documented in the owner's drawings or withdrawals journal, while credit sales are recorded in sales journals (Garrison et al., 2018). The purchase of merchandise on account generally enters the purchases journal, with the subsequent posting to accounts payable (Romney & Steinbart, 2018).

Special Journals and Their Posting Frequencies

In the context of Rauch Computer Components Inc., the cash receipts journal's columns are posted with different frequencies. Accounts receivable and sales discounts are usually posted only in total at the end of the period to streamline data processing, whereas cash, primarily influenced by daily transactions, is posted periodically or daily. Other accounts, such as miscellaneous receivables or payables, are posted either daily or in total, depending on the frequency of related transactions (Garrison et al., 2018). This categorization enhances efficiency by reducing the volume of individual postings and focusing on periodic summaries, which is particularly useful for high-volume operations (Weygandt et al., 2019).

Subsidiary Ledger Balances and Transaction Effects

Regarding Pennington Company, the opening balance in the Valdez subsidiary account on January 1, 2014, can be deduced by adjusting the control account balance for subsequent transactions. With a control account balance of $9,250 and subsequent payables, such as purchases and payments, recorded, the initial subsidiary balance for Valdez can be computed through a reconciliation process (Garrison et al., 2018). This involves subtracting payments made and adding new purchases, considering returns if applicable.

Recording May 2014 Transactions for R. Santiago Co.

The transactions listed include investments, sales (cash and credit), purchases, salary payments, and receipts. Accurate journal entries for each transaction are vital. For instance, a cash investment increases cash and owner’s equity; a sale results in a debit to cash or accounts receivable and a credit to sales revenue; purchases decrease cash or increase inventory; and payments of salaries reduce cash. Properly categorizing each into active journals, like the sales journal, the cash receipts journal, and the general journal, ensures accurate record-keeping (Garrison et al., 2018).

Creating a multiple-column cash receipts journal involves recording all cash inflows with references, such as date, accounts credited, cash received, sales discounts, accounts receivable, sales revenue, and costs of goods sold. Grouping similar transactions enhances efficiency and provides a clear cash flow overview (Romney & Steinbart, 2018).

Account Balances at Month-End

At the end of January, based on the totals provided (sales, purchases, cash receipts, and payments), the balances of accounts like Accounts Payable, Accounts Receivable, Cash, Inventory, and Sales Revenue are computed. For example, Accounts Payable is adjusted by purchases minus payments; Accounts Receivable by credit sales minus collections; Cash balance by initial cash plus receipts minus payments; Inventory by opening inventory plus purchases minus cost of goods sold; and Sales Revenue by total sales (Garrison et al., 2018). These calculations are foundational for preparing accurate financial statements.

Conclusion

The effective design and utilization of AIS are essential for modern business success, ensuring accurate, timely, and secure financial data management. Recognizing the scope, assessing costs versus benefits, considering user needs, properly classifying accounts in ledgers, and accurately recording transactions underpin sound financial reporting. Such practices not only assure compliance and operational efficiency but also provide a strategic advantage in competitive markets.

References

• Bierstaker, J., Brody, R. G., & Pacini, C. (2001). Accountants’ perceptions regarding fraud detection and prevention methods. Managerial Auditing Journal, 16(5), 284-286.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial accounting. McGraw-Hill Education.
• Gelinas, U. J., Sutton, S. G., & Hastings, R. W. (2017). Accounting information systems. Cengage Learning.
• Hall, J. A. (2017). Financial accounting and reporting. McGraw-Hill Education.
• Gordon, L. A., & Loeb, M. P. (2002). The economics of information security investment. ACM Transactions on Information and System Security (TISSEC), 5(4), 438-457.
• Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2013). Intermediate accounting. Wiley.
• Romney, M. B., & Steinbart, P. J. (2018). Accounting information systems. Pearson.
• Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial accounting. Wiley.