introduction chapters
chapter 2
Information Processing
goals discussion goals achievement fill in the blanks multiple choice problems check list and key terms
GOALS
Your goals for this "information processing" chapter are to learn about:
* Accounts, debits and credits.
* The journal.
* The general ledger.
* The trial balance.
* Computerized processing systems.
* T-Accounts.
DISCUSSION
Accounts, debits and credits
ACCOUNTING SYSTEMS: The previous chapter showed how transactions caused financial statement amounts to change. Message boxes, arrows, before and after examples, etc. were used to develop the illustrations. Imagine if a real business tried to keep up with its affairs this way! Perhaps a giant chalk board could be set up in the accounting department. As transactions occurred, they would be called in to the department and the chalk board would be updated. Chaos would quickly rule. Even if the business could manage to figure out what its financial statements were supposed to contain, it probably could not systematically describe the transactions that produced those results. Obviously, a system is needed.
It is imperative that a business develop a reliable accounting system to capture and summarize its voluminous transaction data. The system must be sufficient to fuel the preparation of the financial statements, and be capable of maintaining retrievable documentation for each and every transaction. In other words, some transaction logging process must be in place. In general terms, an accounting system is a system where transactions and events are reliably processed and summarized into useful financial statements and ...