Topic 2 - The Accounting Information System

Front 1

Describe the Accounting Information System

Back 1

The collection and processing of transaction or data and communicating of financial information to interested parties is known as the Accounting Information System.

Front 2

Describe the steps in the recording process

Back 2

1) Identify the transactions and analyse the effects each transaction has on the accounts

2) Enter the transaction information in a journal.

3) Transfer the journal information to a ledger.

Front 3

Are debit/credit balances favourable or unfavourable?

Back 3

They are neither favourable nor unfavourable. A debit balance simply means that the amount of debit exceeds the amount of credit and vice versa.

Front 4

What is a Journal?

Back 4

Provides chronological record of all transactions.

It keeps in one place the complete effect of transactions which helps to prevent or locate errors.

Front 5

What is a Ledger?

Back 5

A ledger is the entire group of accounts maintained by an entity, it keeps in one place the transaction information and changes brought about to the specific account balances.

Front 6

What is a trial balance and what are its purposes?

Back 6

A list of accounts and their balance at a given time.

The purposes of a trial balance are:

1) Prove mathematical equality of debit and credit after posting.

2) Uncover possible errors in journalising and posting.

3) Useful in the preparation of a financial statement.

Front 7

Why is a Chart of Accounts important?

Back 7

1) Helps organise the accounts

2) Helps identify the location of accounts in a ledger

3) Facilitates the recording process

Front 8

List the type of Debit/Credit Accounts

Back 8

Debit:

Dividends

Expenses

Assets

Credit:

Share Capital

Liabilities

Revenue