Acc 300 Exam 1 Review

Front 1

Approving credit for returned merchandise is an example of:

a. a financial transaction

b. non-financial transaction

Back 1

b. non-financial transaction

Front 2

Horizontal information flows

Back 2

>more details, operations-oriented information

Front 3

Vertical information flows

Back 3

>more summarized and condensed information

-downward flows include instructions, quotas, and budgets

-upward flows include aggregated information and operations data

Front 4

Financial Transaction

Back 4

>Tracked by AIS

>definition: an economic event that:

-affects the assets & equities of an organization

-is reflected in its accounts

-is measured in monetary terms

Front 5

AIS Subsystems

Back 5

>Transaction Processing System (TPS) - 3 cycles: revenue, expenditure, conversion

>General Ledger/Financial Reporting System (GL/FRS): summarizes data from the TPS to update general ledger accounts; create reports that are for both internal and external users

>Management Reporting Systems (MRS): take and summarizes data in the TPS and GL/FRS to create reports for internal users

Front 6

In the SUA project, how would one find out how much is owed to a specific vendor?

Back 6

This can be found in the account payable subsidiary ledger

Front 7

Record Layouts

Back 7

>conceptually illustrates how data is stored

>note that a record layout representation does not necessarily indicate how the data is physically stored

Front 8

Primary Key

Back 8

>something that every file must have

>identifier

>definition: a data item that uniquely identifies each record within a file

Front 9

A Significant problem with flat-file environments

Back 9

>data redundancy

-individual data items are stored repeatedly sometimes with different titles

-storing the same data in more than one place in the system

Front 10

What is the OS called in the database model?

Back 10

>OS in the database model is called the Database management system (DBMS)

Front 11

What does the DBMS do?

Back 11

>holds logical structures

>controls access to database

Front 12

Direct Data Redundancy

Back 12

>hard-keying data that is already entered in another place in the system

Front 13

Indirect Data Redundancy

Back 13

>hard-keying data that can be derived from data already in the system. ex. a sum of all the purchases already recorded

Front 14

XBRL

Back 14

>classification scheme

>all publicly traded companies required to submit financial statements to SEC in this format

>stands for eXtensible Business Reporting Language

>an internet formatting standard for the dissemination of financial information

>facilitates publication, exchange, and processing of information

Front 15

What might the accounts receivable aged trial balance, such as the one prepared in the SUA, help to determine?

Back 15

>helps to project the amount of noncollectable accounts

Front 16

Should accountants serve as a filter?

Back 16

It is not a question of if, but when. An accountant should serve as a filter but not until all data is entered. So, the accountant should filter at the output stage. The accountant can select from the information what they need. Filtering early can cause important information to be left out. If filtering is done at the output stage, no information is left out.

Front 17

Types of processing used in computer accounting systems

Back 17

>Batch

>Real-time

-online processing (OLP): master file is updated after each transaction

Front 18

The development of modern accounting

Back 18

>attributed to Luca Pacioli, in late 1400s
>oriented toward maintaining equality of algebraic model: assets = liabilities + owner's equity
>Pacioli's system was based upon a chart of accounts and a double entry system of recording the results of transactions
>every transaction would be recorded as affecting two economic elements

Front 19

Source Documents

Back 19

created at beginning of the transaction to capture data

Front 20

Product Documents

Back 20

the results of transaction processing

-ex. invoices, paychecks

Front 21

Turnaround Documents

Back 21

product documents that become source documents for another system

-ex. remittance advice

Front 22

Journals

Back 22

>records of chronological entry

>in a manual system each transaction requires a separate journal entry

Front 23

Special Journals

Back 23

>record similar transactions

-periodic posting to GL and subsidiary ledgers is required from special journals

-common special journals: sales, purchasing, cash receipts, cash disbursements.

Front 24

General Journal

Back 24

>records nonrecurring, infrequent, and dissimilar transactions

-in chronological order

Front 25

Ledgers

Back 25

show the account balances, or the financial effects of the transactions on the related accounts

Front 26

General Ledger

Back 26

contains the totals of all account activity

-beginning balance, current activity, and ending balances

-control accounts for subsidiary ledger totals

Front 27

Subsidiary Ledger

Back 27

groups similar individual accounts

-sales has no subsidiary ledger

Front 28

Audit Trail

Back 28

>a "trace" of a transaction from its initiation through to the financial statements

>important for 2 reasons:

1. assists in correcting errors

2. allows auditors and others to verify that a particular transaction was recorded correctly, and is accurately reflected on the financial statements

Front 29

In a Manual System, the audit trail defined

Back 29

>the sequential numbering of source documents

>the associated posting references that accompany the recording and processing of data to the journals and ledger accounts

**you should be able to trace the audit trail in both directions

Front 30

Master Files

Back 30

contain account data that are updated from transaction data

-ledgers

Front 31

Transaction Files

Back 31

hold records from events that will change master files

-journals

Front 32

Reference Files

Back 32

hold the transaction processing or rules: venders, prices

Front 33

Archive Files

Back 33

are historical files of past journals and ledgers

Front 34

Batch Processing

Back 34

>the master file data is updated long after the events take place from data stored in a transaction file

>a group of similar transactions are accumulated over time and then processed together

Front 35

Real-time processing

Back 35

>update happens at the same time the even is taking place

>transactions are processed individually as the event occurs

Front 36

key observations that can be made with respect to the data contained on each of the following components of a traditional AIS:

-source document

-journal

-subsidiary ledger

-ledger

-financial statements

Back 36

1. there is a loss of data going from source documents to financial statements

2. information becomes aggregated, difficult to dis-aggregate

3. there is data redundancy, both direct and indirect

4. if all source documents were stored in database, financial statements and reports could be made, eliminating data redundancy

5. (an example of this)

Front 37

5 Basic Criticisms of the Traditional debit/credit-journal/ledger accounting system architecture

Back 37

1. only captures data about a subset of an organization's transactions

2. stores and processes only a limited number or characteristics about financial transactions

3. data are not recorded and processed in real time, as the business activity or event occurs

4. captures and stores duplicate data in a highly summarized form

5. stores financial data to satisfy one primary view

Front 38

What is the 3 way match?

Back 38

-receiving report (what was received)
-purchase order (what was ordered)
-invoice (what was billed)

Front 39

Purpose of purchase order

Back 39

place order for goods from vendor

Front 40

Sales Department

Back 40

>where the sales process begins
>sales dept. clerk manually records the essential details on a sales order
>revenue cycle

Front 41

Credit Approval Department

Back 41

>organizationally and physically segregated from sales dept to provide independence to the authorization process

>credit dept. clerk verifies customer's creditworthiness

>revenue cycle

Front 42

Warehouse

Back 42

>warehouse clerk receives stock release copy of sales order, uses this to locate inventory

>revenue cycle

Front 43

Shipping Department

Back 43

>shipping clerk reconciles products received from warehouse with the shipping notice copy of the sales order

>prepares bill of lading if order is correct, then products are packaged and shipped

>revenue cycle

Front 44

Billing Department

Back 44

>upon receipt of shipping notice and stock release, the billing clerk uses the dept.'s PC, bills customer

>billing clerk then enters the transaction into the sales journal file and distributes the stock release and ledger copies of the sales order to the inventory control and AR dept.s

>revenue cycle

Front 45

Shipping Notice

Back 45

>evidence that the customer's order was filled and shipped

>provides proof that the product has been shipped, and is the trigger document that initiates the billing process

>sent to sales dept. where it is filed in the customer order file to reflect the order's shipped status
>revenue cycle

Front 46

Receiving Department

Back 46

>where sales return process begins

>receiving clerk manually prepares return slip which is sent to the sales dept.

>revenue cycle

Front 47

Mail Room

Back 47

>where customer payments and remit advices are received

>clerk opens mail, reconciles the checks and remit advices, endorses the checks, gathers remit advices and checks into batches, and prepares remit list

>clerk sends checks and copy of remit list to cash receipts dept. clerk

>remit advices and copy of remit list sent to AR dept.

>revenue cycle

Front 48

Cash Receipts Department

Back 48

>cashier records checks in cash receipts journal and deposits them at the bank

>employee periodically prepares journal voucher and sends it to general ledger dept.

>revenue cycle

Front 49

Accounts Receivable Department

Back 49

>uses remit advices to update customer balances in subsidiary ledgers

>clerk prepares a summary of changes to account balances, which is sent to the general ledger department

>revenue cycle

Front 50

General Ledger Department

Back 50

>upon receipt of journal voucher and account summary from cash receipts and AR, the GL clerk reconciles the information to the control accounts

>revenue cycle

Front 51

Controller's Office

Back 51

>periodically performs bank reconciliation by comparing deposit slips returned from the bank, account summaries used to post to the accounts, and journal vouchers

>revenue cycle

Front 52

Bill of Lading

Back 52

a formal contract between the seller and the shipping company to transport the goods to the customer

Front 53

Receiving Report

Back 53

>

Front 54

In the SUA, when goods were returned, what document was filled out?

Back 54

credit memo