The Accounting Information System Accounting The Accounting Information System Cycle Basic terminology Identifying and recording Income statement Debits and credits Journalizing Accounting equation Posting Financial Statements For Merchandisers Statement of retained earnings Statement of financial position Closing entries Financial statements and ownership structure Trial balance Adjusting entries Adjusted trial balance Preparing financial statements Closing Post closing trial balance Reversing entries Summary Slide 3 4 Accounting Information System Accounting Information System AIS Collects and processes transaction data Disseminates the information to interested parties Slide 3 5 Accounting Information System Helps management answer such questions as How much and what kind of debt is outstanding Were sales higher this period than last What assets do we have What were our cash inflows and outflows Did we make a profit last period Are any of our product lines or divisions operating at a loss Can we safely increase our dividends to shareholders Is our rate of return on net assets increasing Slide 3 6 Basic Terminology Event Transaction Account Journal Posting Trial Balance Real Account Adjusting Entries Nominal Account Financial Statements Ledger Closing Entries Slide 3 7 LO 1 Understand basic accounting terminology