Ledgers and Journals
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Accounting Information Systems (AIS)
Advantages of Subsidiary Ledgers
Show transactions in a single account providing up to date information.
Free the general ledger of excessive details.
Provide effective control.
Provide for segregation of duties.
Significantly reduce the number of transactions that require recording in the general journal.
Each transaction can only be recorded in one journal.
- Cash Receipts
- Cash Payments
- Sales/Purchases Returns and Allowances
Record sales of inventory on account (credit sales only)
Cash sales recorded in cash receipts journal.
- Dr Accounts Receivable
- Cr Sales
- Dr Cost of Sales
- Cr Inventory
Used to record purchases of inventory on account (Credit purchases only).
Cash purchases recorded in the cash payments journal.
- Dr Inventory
- Cr Accounts Payable
Advantages of Automatic AIS
Ability to process large number of transactions quickly.
Automatic posting of transactions.
Fast response time.
Flexible and fast report production.
Disadvantages of Automated AIS
Use of inappropriate and/or incompatible software and hardware.
Need for reliable back-up procedures
Lack of computer system skills
Computer viruses and hackers
Fraud and embezzlement
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