WGU D217 ACCOUNTING INFORMATION
SYSTEMS INTERNAL CONTROLS AND KEY
CONCEPTS
◉ Information Flow (vertical flow).
Answer: Distributes information downward from senior managers
to junior managers and operations personnel in the form of
instructions, quotas, and budgets. In addition, summarized
information pertaining to operations and other activities flows
upward to managers at all levels. Management uses this information
to support its various planning and control functions.
◉ Information Flow (exchanges day to day).
Answer: Exchanges with trading partners include customer sales
and billing information, purchase information for suppliers, and
inventory receipts information. Stakeholders are external entities
with a direct or indirect interest in the firm. Stockholders, financial
institutions, and government agencies are examples of external
stakeholders. Information exchanges with these groups include
financial statements, tax returns, and stock transaction information
◉ General Ledger System (GSL).
Answer: Hub connected to other systems of the firm threw spokes of
information flows. Transaction cycles process individual events that
,are recorded in special journals in subsidiary accounts. Summarizes
of these transactions, and never source documents themselves flow
into the GSL and become sources of imput for management and
financial reporting systems.
◉ Financial Reporting Process.
Answer: Final step in the over all accounting process. The process
begins with a clean slate at the start of a new fiscal year. Only the
balance sheet (permanent) accounts are carried forward from the
previous year. From this point, the following steps occur:
1)Capture the transaction. Within each transaction cycle,
transactions are recorded in the appropriate transaction file.
2)Record in special journal. Each transaction is entered into the
journal. Recall that frequently occurring classes of transactions, such
as sales, are captured in special journals. Those that occur
infrequently are recorded in the general journal or directly on a
journal voucher.
3)Post to subsidiary ledger. The details of each transaction are
posted to the affected subsidiary accounts.
4)Post to general ledger. Periodically, journal vouchers, summarizing
the entries made to the special journals and subsidiary ledgers, are
prepared and posted to the GL accounts. The frequency of updates to
the GL will be determined by the degree of system integration.
, 5)Prepare the unadjusted trial balance. At the end of the accounting
period, the ending balance of each account in the GL is placed in a
worksheet and evaluated in total for debit-credit equality.
6)Make adjusting entries. Adjusting entries are made to the
worksheet to correct errors and to reflect unrecorded transactions
during the period, such as depreciation.
7)Journalize and post adjusting entries. Journal vouchers for the
adjusting entries are prepared and posted to the appropriate
accounts in the GL.
8)Prepare the adjusted trial balance. From the adjusted balances, a
trial balance is prepared that contains all the entries that should be
reflected in the financial statements.
9)Prepare the financial statements. The balance sheet, income
statement, and statement of cash flows are prepared using the a
◉ Accounting Information Systems (AIS).
Answer: Specialized subset of information systems that processes
financial transactions, AIS applications process financial
transactions. Framework for Information from Transaction
Processing Systems, General Ledger Systems, and Management
Reporting Systems flow into AIS.
◉ centralized data processing.
Answer: Model under which all data processing is performed by one
or more large computers, housed at a central site, that serve users
throughout the organization.
SYSTEMS INTERNAL CONTROLS AND KEY
CONCEPTS
◉ Information Flow (vertical flow).
Answer: Distributes information downward from senior managers
to junior managers and operations personnel in the form of
instructions, quotas, and budgets. In addition, summarized
information pertaining to operations and other activities flows
upward to managers at all levels. Management uses this information
to support its various planning and control functions.
◉ Information Flow (exchanges day to day).
Answer: Exchanges with trading partners include customer sales
and billing information, purchase information for suppliers, and
inventory receipts information. Stakeholders are external entities
with a direct or indirect interest in the firm. Stockholders, financial
institutions, and government agencies are examples of external
stakeholders. Information exchanges with these groups include
financial statements, tax returns, and stock transaction information
◉ General Ledger System (GSL).
Answer: Hub connected to other systems of the firm threw spokes of
information flows. Transaction cycles process individual events that
,are recorded in special journals in subsidiary accounts. Summarizes
of these transactions, and never source documents themselves flow
into the GSL and become sources of imput for management and
financial reporting systems.
◉ Financial Reporting Process.
Answer: Final step in the over all accounting process. The process
begins with a clean slate at the start of a new fiscal year. Only the
balance sheet (permanent) accounts are carried forward from the
previous year. From this point, the following steps occur:
1)Capture the transaction. Within each transaction cycle,
transactions are recorded in the appropriate transaction file.
2)Record in special journal. Each transaction is entered into the
journal. Recall that frequently occurring classes of transactions, such
as sales, are captured in special journals. Those that occur
infrequently are recorded in the general journal or directly on a
journal voucher.
3)Post to subsidiary ledger. The details of each transaction are
posted to the affected subsidiary accounts.
4)Post to general ledger. Periodically, journal vouchers, summarizing
the entries made to the special journals and subsidiary ledgers, are
prepared and posted to the GL accounts. The frequency of updates to
the GL will be determined by the degree of system integration.
, 5)Prepare the unadjusted trial balance. At the end of the accounting
period, the ending balance of each account in the GL is placed in a
worksheet and evaluated in total for debit-credit equality.
6)Make adjusting entries. Adjusting entries are made to the
worksheet to correct errors and to reflect unrecorded transactions
during the period, such as depreciation.
7)Journalize and post adjusting entries. Journal vouchers for the
adjusting entries are prepared and posted to the appropriate
accounts in the GL.
8)Prepare the adjusted trial balance. From the adjusted balances, a
trial balance is prepared that contains all the entries that should be
reflected in the financial statements.
9)Prepare the financial statements. The balance sheet, income
statement, and statement of cash flows are prepared using the a
◉ Accounting Information Systems (AIS).
Answer: Specialized subset of information systems that processes
financial transactions, AIS applications process financial
transactions. Framework for Information from Transaction
Processing Systems, General Ledger Systems, and Management
Reporting Systems flow into AIS.
◉ centralized data processing.
Answer: Model under which all data processing is performed by one
or more large computers, housed at a central site, that serve users
throughout the organization.
