ACCT201 - Chapter 7

Batch Processing - p.270

Accumulates source documents for a period of time and then processes them all at once such as daily, weekly, or monthly

Columnar Journal - p.263

Any journal with one or more column

Internal Controls - p.259

Are procedures that help managers control and monitor business activities. They include policies to protect company assets and ensure compliance with laws and regulations

Enterprise Resource Planning (ERP) Software - p.271

Includes the programs that manage a company's operations. They extend from order taking to manufacturing to accounting. Can help speed decision making, identify costs for reduction, and give managers control over operations

Information Processor - p.260

Summarize information for use in analysis and reporting. Includes journals, ledgers, working papers, and posting procedures. Each assists in transforming raw data to useful information

Input Device - p.260

Take information from source documents and transfer it to information processing. These devices convert data on source documents to a form usable by the system. Journal entries are a type of input device. Keyboards and scanners are the most common input devices in business.

Controlling Account - p.262

The Accounts Receivable account is said to control the accounts receivable ledger and is called a controlling account

Cash Receipts Journal - p.265

Used to record all receipts of cash ( all transactions that include a debit to Cash); Are separated into three types: 1. Cash from Credit Customers in Payment of their accounts 2. Cash from cash sales 3. Cash from other sources

Special Journal - p.261

Used to record and post transactions of similar type. Accumulate debits and credits of similar transactions and post amounts as column totals instead of individual amounts

Sales Journal - p.263

Used to record sales of inventory on credit. Sales of inventory for cash are recorded in the cash receipts journal. Sales of noninventory assets on credit are recorded in the general journal.

Check Register - p.269

When a cash payments journal has a column for check numbers, it is sometimes called a check register

Components of Accounting Systems - p.260

5 of them: source documents, input device, information processors, information storage, and output devices

Data Visualization - p.271

A graphical presentation of data to help people understand its significance

Schedule of Accounts Payable - p.268

A list of accounts from the accounts payable ledger with their balances and the total. If the total of the individual balances equals the balance of the Accounts Payable controlling account, the accounts in the accounts payable ledger are assumed correct.

Subsidiary Ledger - p.261

A list of individual accounts with a common characteristic. Has detailed information on specific accounts in the general ledger. Accounts Receivable Ledger Accounts Payable Ledger

Data Analytics - p.271

A process of analyzing data to identify meaningful relations and trends; helps individuals make informed business decisions

Accounts Receivable Ledger - p.262

A subsidiary ledger, is set up to keep a separate account for each customer. The general ledger usually has a single Accounts Receivable account that equals the total of its subsidiary ledgers

Accounting Information System - p.259

Collect and process data from transactions and events, organize them in reports, and communicate results to decision makers. Help users make more informed decisions and better understand the risks and returns of different strategies. 5 Principles of Accounting Information Systems are: Control Relevance Compatibility Flexibility Cost-Benefit

Accounts Payable Ledger - p.262

Companies buy on credit from several suppliers and keep a separate account for each supplier by having an Accounts Payable controlling account in the general ledger and a separate account for each supplier (creditor) in an accounts payable ledger

Online Processing - p.270

Enters and processes data as soon as source documents are available. This means that databases are immediately updated.

General Journal - p.261

Is an all-purpose journal in which we can record any transaction

Purchases Journal - p.267

Is used to record all credit purchases, including those for inventory. Purchases using cash are recorded in the cash payments journal

Information Storage - p.260

Keeps data accessible to information processors. After being input and processed, data are stored for use in future analyses and reports. Auditors rely on this database when they audit both financial statements and a company's controls. Modern systems depend increasingly on cloud storage.

Computer Network - p.270

Links among computers giving users access to common databases, programs, and hardware

Schedule of Accounts Receivable - p.264

Lists each customer and the balance owed. If this total equals the balance of the Accounts Receivable controlling account, the accounts in the accounts receivable ledger are assumed correct

Output Devices - p.260

Make accounting information available to users. Common output devices are printers, monitors, and smartphones. Output devices provide users a variety of items including customer bills, financial statements, and internal reports.

Cash Payments Journal - p.268

Or cash disbursements journal, is used to record all cash payments (all transactions with a credit to cash)

Flexibility Principle - p.259

Prescribes that an accounting information system be able to adapt to changes in the company, business environment, and needs of decision makers. Technological advances, competitive pressures, consumer tases, regulations, and company activities constantly evolve.

Compatibility Principle - p.259

Prescribes that an accounting information system conform with a company's activities, personnel, and structure

Control Principle - p. 259

Prescribes that an accounting information system have internal controls.

Relevance Journal - p.259

Prescribes that an accounting information system report useful, understandable, and timely information for decision making

Cost-benefit Principle - p.259

Prescribes that the benefits from an activity in an accounting information system outweigh the costs of that activity

Days' payable outstanding (DPO) - p.271

The average length of time that payables are deferred until payment is made Days' Payable Outstanding (DPO) = (Accounts Payable / Cost of Goods Sold) x 365