PROFESSOR : JOHNSON

Lecture1: Accounting first

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good morning class or good afternoon or good evening depending upon what time of the day you decided to watch the class video lecture today I want to thank you all for allowing me to present content in this way I am teaching a second bi-term class on managing not for profits and so I’ll be using this format quite a bit in the upcoming weeks and while I am not happy to have my arm in a sling I am pleased that it did give me an opportunity to practice this format and I’ll look forward to getting some feedback from you about the format and what you thought its advantages and disadvantages were so I’ll be better able and prepared to deal with those later on this semester and I am going to look forward to being back with you in the classroom on Tuesday check for slides are up and you will also see them here in the tegrity platform which you are accessing through blackboard I would encourage you of course to go ahead and continue reading chapter four and five and work on your terms and definitions in the glossary today I want to I am going to split this into two parts so maybe one will be maybe ten or fifteen minutes and the other one may be ten or fifteen minutes just so that I can make sure the equipment is working correctly but I want to talk a little bit about introducing business processes and the concepts surrounding them business fundamentals collecting and reporting accounting information and core business processes the authors pointed out that accounting information systems depend on the flow of data through various organizational sub systems and in fact without that constant stream of data you don’t you don’t your not able to produce the kinds of reports and management information that is necessary for running an organization organizations just like individuals are living systems and they have a startup phase they grow they mature and if they don’t continue to change then they die their organizational systems have to continue to evolve as technology evolves and as their business evolves effective processing systems ensure and capture appropriate data and accurate information reporting and you should also know that transaction processing cycles organize transactions related to an organizations business process I think that you’ve probably talked about accounting cycles in other classes but it begins with when an accounting personnel analyzes a transaction from a source document and I think its interesting that your authors start the accounting cycle when a source document is produced because when we think of the source document we think of a paper based source document and I think its fair to say that in today’s world sometimes accounting transactions begin and are analyzed from a source document that is electronic and I suppose that they are not precluding that possibility in this in their treatment of this material but I think you ought to begin to think about source documents as something broader than for example a sales invoice or a sales transaction receipt they in fact do say that a source document is a piece paper or an electronic form that records a business activity like a purchase or sale of goods the next concept that they talk about are journals and accounting personnel record transactions in journals and a journal is very simply a chronological record of a business event by account business events by account the journal can be a general journal or it can be a special journal a general journal allows you to of course record any kind of accounting transaction and with the completion of your SUA just recently you have had plenty of opportunities to record transactions in a general journal you also have used special journals which capture specific types of transactions you had task disbursements task receipts payroll journals and I believe you had a purchasing journal a ledger can be a general ledger or it can be a subsidiary ledger of course your general ledger is a collection of detailed monetary information about an organizations assets liabilities revenues or expenses while a subsidiary ledger contains detailed records pertaining to a particular account in the general ledger trial balances lets talk about that for just a moment once an accounting information systems records journal entries and is posted them to the general ledger the system can create a trial balance and you’ll be you’ll be witnessing this and experiencing this when you begin your great plains exercise there are three end of period trial balances that are needed there is a pre-justed trial balance after all of the entries have been posted there is an adjusted trial balance after the adjustments have been recorded and posted and then finally you will have a post closing trial balance after the temporary accounts have been closed closing interest have been recorded and posted financial statements are the primary output of a financial accounting system and they include the income statement the balance sheet the statement of task flows and in a for prof organization the statement of owners equity and a not for profit organization you don’t normally see that coding systems are important in accounting information systems because they allow you to record to store to classify and to retrieve financial data computer systems very frequently use numeric or sometimes alphanumeric codes which is very simply a combination of letters and numbers for processing accounting transactions and the purpose of coding is to uniquely identify a transaction or account to compress the data to aid in the classification process and sometimes it is to convey special meanings there is a considerable amount of thought that is put into what type of code to use and how to construct that code and there are four kind of ways of thinking about that often in organizations they give a code a mnemonic code which is just very simply a code that would mean something about what it represents you might use y to represent the concept of year you might put d to represent a concept of a day so you use a mnemonic code a sequence codes assign numbers or letters in consecutive order and you frequently see this when you are processing one sale after another sale you normally see you know a sale for example your check register you have one check number after another check number it’s a sequence of numbers or it could be a sequence of letters or a combination of those block codes are sequential codes in which specific blocks of numbers are reserved for particular uses so you might set aside a certain block of numbers to be used for particular kinds of transactions and then finally greek codes which reveal two or more dimensions or facets pertaining to the object codes should serve some useful purpose they need to be consistent they need to be standardized throughout the organization and they should plan for future expansion on any number of consulting visits that I have had personally I often find coding is a major issue for companies they start out with a particular type of coding system and then start a new line of products or a new set of inventory and the old system for one reason or another is not working for them and they create a new system and they never then migrate the other products or inventory into that new system and what often happens is they end up with multiple ways of coding things and then and then when they realize that this is a problem and start trying to figure out how to integrate the coding and it’s a very challenging thing for organizations and as a designer of systems to the extent that you are involved in that in your career in the future you need to be cognizant of the fact that the organization that your working for may not only just produce typewriters for example maybe your going to produce computers or maybe your going to produce a virtual reality devices or perhaps or some device we haven’t even dreamed of yet and when designing  coding systems it is important to take into consideration what those possibilities might be because its very easy to rush to judgment and to think ok well we’re just going to record our transactions one two three four we’re going to use sequencing and this is the way we’re going to do it but what happens when we want to start grouping them by clients or by other kinds of data and you have to take those into consideration I am going to stop the video recording now before I go on to reporting and start up a new vide lecture so I’ll be back with you in just a minute.