Accounting Information System Lesson & Exercises - Holy Angel University PDF

Accounting Information At the end of the lesson, the student will be able to: the inventory flow using Smartbooks Understand Determine the basic features of each sub-module in the Inventory module using Smartbooks Perform procedures in each inventory flow Understand...

Accounting Information At the end of the lesson, the student will be able to: the inventory flow using Smartbooks Understand Determine the basic features of each sub-module in the Inventory module using Smartbooks Perform procedures in each inventory flow Understand and perform the concepts of the following using Smartbooks  Batch and Serial Numbers  Pricelists and Discounts Use Smartbooks Cloud Accounting to simulate the whole Accounting Cycle Accounting Information System  LESSON V: INVENTORY CYCLE Smartbooks enables you to manage all the items that you purchase, manufacture, sell or keep in stock. Services, such as labor, can also be defined as items. This can be useful for defined services you sell on a regular basis. Items can also be used to describe fixed assets that are tracked for accounting purposes. For each item, enter the data relevant for a particular area in the system. This data is used automatically by the system for purchasing, sales, production, managing your warehouse, and accounting. Smartbooks, therefore, provides optimum support for your business processes. Using the item data in the system, you can optimize your stock. You have complete control over stock quantities at all times and also can analyze the financial aspects of stockholding at the same time. In Smartbooks, there is a direct relationship between warehouses and items. Accounting Information System  Exercise 7 Inventory Management Exercise 7.1 Defining Warehouse Add the following warehouse: Admin > Setup > Inventory > Define Warehouses Accounting Information System Inventory Transactions When an item is purchased or sold, warehouse inventory is automatically reduced or increased when the transactions are entered in purchasing and sales. For example, if a delivery note is created based on a sales order for a customer, the warehouse stock is reduced by the delivery quantity when the delivery note is added. The purchase or sale of an item is, however, not only the transactions that result in an item receipt or item issuance. For example, if five pieces of an item are found damaged in the warehouse. These items cannot, however, be sold because they are now useless. In this case, you have to post a separate item issuance with the function described here. Accounting Information System An Item Receipt lets you Item increase the inventory level Itemthe inventory level in a An Item Issuance lets you reduce Receipt in situation that is not the direct result of adding a Issuance situation that is not direct results of a sales document Payable document. entry. When you purchase an item, the Storage Location After an item is sold, the Storage Location inventory is increases automatically when Smartbooks enters the automatically reduced when Smartbooks enters the transaction. For example, if you create a Receiving, transactions. For example, if you create a delivery the Storage Location inventory increases accordingly document that is based on a sales order, the Storage by the specified quantity. Location inventory is reduced by the specified quantity once the delivery document is added. However, the sale However, Receiving is not the only transaction that of an item is not the only type of transaction that results results in an Item Receipt. Example, an increase in in an Item Issuance. You cannot update or delete a the inventory by after carrying out a physical goods issue document after you add it. To correct the inventory, you establish that part of the quantity Details tab information in an Item Issuance that has not stored that has not been taken into consideration. been entered correctly, enter a compensatory goods You can enter the overlooked quantity by means of Itemmovement, such as an Item Receipt or Inventory an Item Receipt in the system. (e.g.: freebies from Transfer. (e.g.: warehouse fire/theft) supplier, inventory count is high) Transfer Item Transfer document is used to transfer inventory from one Storage Location to another. An inventory transfer can also be carried out as a consignment for a customer. The items are then stored in the customer’s Storage Location and are sold from here. Accounting Information System  Exercise 7.2 Item Receipt Received freebies from supplier: Inventory > Inventory Transactions > Item Receipt Accounting Information System  Exercise 7.3 Item Receipt Physical inventory count is higher than system inventory count: Inventory > Inventory Transactions > Item Receipt Accounting Information System  Exercise 7.4 Item Issuance Issued items due to warehouse theft. Inventory > Inventory Transactions > Item Issuance Accounting Information System  Exercise 7.5 Item Issuance Issued items due to warehouse fire. Inventory > Inventory Transactions > Item Issuance Accounting Information System  Exercise 7.6 Item Transfer Transfer the following items from your assigned warehouse (i.e. WAREHOUSE XX) to the created warehouse in 7.1. Inventory > Inventory Transactions > Item Transfer Accounting Information System Batch and Serial Numbers Item An Item Receipt lets you increase the inventory level Item An Item Issuance lets you reduce the inventory level in a Receipt in situation that is not the direct result of adding a Issuance situation that is not direct results of a sales document Payable document. entry. When you purchase an item, the Storage Location After an item is sold, the Storage Location inventory is increases automatically when Smartbooks enters the automatically reduced when Smartbooks enters the transaction. For example, if you create a Receiving, transactions. For example, if you create a delivery the Storage Location inventory increases accordingly document that is based on a sales order, the Storage by the specified quantity. Location inventory is reduced by the specified quantity once the delivery document is added. However, the sale However, Receiving is not the only transaction that of an item is not the only type of transaction that results results in an Item Receipt. Example, an increase in in an Item Issuance. You cannot update or delete a the inventory by after carrying out a physical goods issue document after you add it. To correct the inventory, you establish that part of the quantity Details tab information in an Item Issuance that has not stored that has not been taken into consideration. been entered correctly, enter a compensatory goods You can enter the overlooked quantity by means of movement, such as an Item Receipt or Inventory an Item Receipt in the system. Transfer. Accounting Information System Batch and Serial Numbers Batch Serial Numbers Low values Numbers High turnover – easily sold and bought High values Tedious if counted by one so it is counted by Low turnover – easily sold and bought groups or batch Single items Sorted out broadly by similar characteristics (e.g.: Luxury items, appliances color, size) Have attached warranty (repair or replacement) Accounting Information System  Exercise 7.7 Batches Adding of Item: Inventory > Items Purchase Order > Receiving > A/P Voucher Sales Order > Shipment > Invoice Add the following item managed by batches.  Purchase and receive from [Supplier in Exercise 3.1] 100pcs of [Item above] by batches. Make 4 batches divided equally.  Sell and deliver to [Customer in Exercise 2.1] 54pcs of [Item above] by batches. Note: Use your Branch No. when defining batch numbers. Example, if you are using Branch 1, start at: Accounting Information System  Exercise 7.8 Batches Adding of Item: Inventory > Items Purchase Order > Receiving > A/P Voucher Sales Order > Shipment > Invoice Add the following item managed by batches.  Purchase and receive from [Supplier in Exercise 3.2] 200pcs of [Added Item] by batches. Make 2 batches divided equally.  Sell and deliver to [Customer in Exercise 2.2] 133pcs of [Added Item] by batches. Note: Continue using the batch number in Exercise 7.7. Accounting Information System  Exercise 7.9 Serial Numbers Adding of Item: Inventory > Items Purchase Order > Receiving > A/P Voucher Sales Order > Shipment > Invoice Add the following item managed by serial numbers.  Purchase and receive from [Supplier in Exercise 3.1] 20pcs of [Item above] by serial numbers.  Sell and deliver to [Customer in Exercise 2.1] 5pcs of [Item above] by serial numbers. Note: Use your Branch No. when generating serial numbers. Example, if you are using Branch 1, use: Accounting Information System  Exercise 7.10 Serial Numbers Adding of Item: Inventory > Items Purchase Order > Receiving > A/P Voucher Sales Order > Shipment > Invoice Add the following item managed by serial numbers.  Purchase and receive from [Supplier in Exercise 3.2] 25pcs of [Item above] by serial numbers.  Sell and deliver to [Customer in Exercise 2.2] 14pcs of [Item above] by serial numbers. Note: Continue using the serial numbers in Exercise 7.9. Accounting Information System  LESSON VI: ACCOUNTING CYCLE The accounting cycle is the comprehensive procedure for documenting and handling each financial transaction that a business undertakes, from the time the transaction takes place to its depiction on the financial statements to the closing of the accounts. Maintaining an accurate record of the entire accounting cycle is one of a bookkeeper's primary responsibilities. For as long as a company is in operation, the cycle repeats itself every fiscal year. Accounting Information System  Journalizin g In accounting and bookkeeping, a journal is a record of financial transactions in order by date. A journal is often defined as the “book of original entry”. The definition was more appropriate when transactions were written in a journal prior to manually posting them to the accounts in the general ledger or subsidiary ledger. General General Journal Journal is the master journal that all company transactions or journal entries are recorded in. A typical general journal has at least five columns:  One for the date  Account title  Posting Reference  Debit column  Credit column The majority of journal entries in Smartbooks comes from one of the other modules: Sales, Purchasing, Treasury and Inventory documents post transaction automatically to the G/L. However, in GAAP accrual-based accounting, you sometimes need to make manual journal entries for certain transactions such as depreciation, accruals, correcting entries, and the like. When a journal entry is added manually, it is recorded immediately and cannot be deleted- only reversed. The purpose of manual journal entries is to record transactions that are not automatically initiated from a sub-ledger or from another process within Smartbooks. Accounting Information System  Exercise 8.1 Journal Voucher Financials > Journal Voucher Record the following transactions using the Journal: On January 3, 20XX, the company issued ordinary share capital worth of P1,000,000, payment was made on cash. Dr. Cash on hand P1,000,000 Cr. Ordinary Share Capital P1,000,000 Issuance of ordinary share capital. Accounting Information System  Exercise 8.2 Journal Voucher - Draft Financials > Journal Voucher Record the following transactions and save it as a draft. On March 30, 20XX, the company recorded a Salary Expense worth of P10,000, paid for through cash. Dr. Salaries and Wages P10,000 Cr. Cash on hand P10,000 Payment of salaries and wages Note: Click ‘Save’ after taking the screenshot of the entry saved as draft. Accounting Information System  Exercise 8.3 Adjusting Entry Financials > Journal Voucher Record the following transaction: On March 31, 20XX, the company accrue the current month’s electricity and water with a total amount of P13,450. Dr. Electricity & Water P13,450 Cr. Accrued Payable P13,450 Accrual of electricity and water Accounting Information System  Exercise 8.4 Recurring Postings Financials > Recurring Postings Create the following recurring entries. Code: RP + [Branch no.] Description: Monthly Rent On April 1, 20XX, the company decided to save the monthly recurring rent expense on the system for their new lease contract starting April 1 this year until April 1 next year. It is to be posted every 15th of the month. Monthly rental amounts to P25,000 and payment is made thru cash. Dr. Rental Expense P25,000 Cr. Cash on hand P25,000 Accounting Information System  General A Ledger general ledger is the master set of accounts that summarize all transactions occurring within an entity. There may be a subsidiary set of ledgers that summarize into the general ledger. The general ledger, in turn, is used to aggregate information into the financial statements of a business; this can be done automatically with accounting software. The general ledger contains a debit and credit entry for every transaction recorded within it, so that the total of all debit balances in the general ledger should always match the total of all credit balances. If they do not match, the general ledger is said to be “out of balance” and must be corrected before reliable financial statements can be compiled from it. Trial Balance A trial balance is a bookkeeping or accounting report that lists the balances in each of an organization's general ledger accounts. (Accounts with zero balances will likely be omitted.) The debit balance amounts are listed in a column with the heading "Debit balances" and the credit balance amounts are listed in another column with the heading "Credit balances." The total of each of these two columns should be identical. Accounting Information System  Exercise 8.5 General Ledger Financials > Reports > General Ledger Generate the General Ledger as of the date of the latest transaction. Exercise 8.6 Trial Balance Financials > Reports > Trial Balance Generate the Trial Balance as of the end of the year. Accounting Information System  Profit and Loss Statement Also known as Income Statement, a profit and loss statement reveals the financial performance of an organization for the entire reporting period. It begins with sales, and then subtracts out all expenses incurred during the period to arrive at a net profit or loss. This is usually considered the most important financial statement, since it describes performance. Balance Sheet A balance sheet shows the financial position of a business as of the report date (so it covers a specific point in time). The information is aggregated into the general classifications of assets, liabilities and capital/equity. Line items within the asset and liability classification are presented in their order of liquidity, so that the most liquid items are stated first. This is a key document, and so is included in most issuances of financial statements. Closing A Entries closing entry is a journal entry made at the end of an accounting period to transfer balances from a temporary account to a permanent account. Companies use closing entries to reset the balances of temporary accounts—accounts that show balances over a single accounting period—to zero. By doing so, the company moves these balances into permanent accounts on the balance sheet. These permanent accounts show a company’s long-standing financials. Accounting Information System  Exercise 8.7 Profit and Loss Statement Financials > Reports > Profit or Loss Generate the Income Statement for the year. Exercise 8.8 Balance Sheet Financials > Reports > Balance Sheet Generate the Balance Sheet as of the end of the year. Accounting Information System  Exercise 8.9 Period-end Closing 1. For Closing the Period: Admin > System Configuration > Journal Period Change the status of the month you want to close from ‘Open’ to ‘Closed’ 2. For Closing Entry: Financials > Closing Period Execute period end closing. 3. For Generating Journal Entry List: Financials > Reports > Journal Entry List View the closing and opening entry on the Journal Entry list. Accounting Information System Thank you! Accounting Information System