Transaction Processing in the AIS

1
Chapter 2

• Transaction Processing in the AIS

2
Outline

• Objectives
• Definition of accounting
• Accounting cycle
• Coding systems
• Role of human judgment and information technology

3
Definition of accounting

• Identifying
• Measuring
• Communicating
• Economic Information
• Informed Judgments Decisions by
• Users

4
Accounting cycle

• Analyze transactions.

• Obtain information about external transactions
  from source documents.

5
Accounting cycle

• Record transactions in a journal.

• Post transactions to ledger.

6
Accounting cycle

• Record and post adjusting entries.

• Prepare an unadjusted trial balance.

7
Accounting cycle

• Prepare financial statements.

• Prepare an adjusted trial balance.

8
Accounting cycle

• Prepare post-closing trial balance.

• Close temporary accounts to retained earnings.

9
Coding systems

• Chart of accounts
• Why important?
• efficiency
• frequency
• consistency

10
Coding systems

• Sequential
• Block coding

• Hierarchical coding
• Mnemonic coding

11
Role of human judgment and information technology

• Human judgment
• Design
• Recognize
• Estimate
• Interpret

• Information technology
• Posting
• Closing
• Trial balances
• Producing