AE21 - IT APPLICATIONS TOOLS FOR BUSINESS

ASSETS=LIABILITIES+EQUITY
Organizational structure
- is a visual representation of how the organization is shaped and how
the company will achieve its long-term goals.
Internal control
- “a process for assuring of an organization’s objectives in operational
effectiveness and efficiency, reliable financial reporting, and
compliance with laws, regulation and policies.”
SOURCE DOCUMENTS
- Is a written account evidencing the sale of goods and/or services
issued to customers in an ordinary course of business w/c necessary
includes (1) VAT/Non-VAT Sales Invoice and (2) VAT/Non-VAT Official
Receipt
- Is a written account evidencing that a transaction has been made
between the seller and the buyer of goods and/or services, forming
part of the books of accounts of business tax payer for recording,
monitoring and control purposes such as document evidencing
delivery, agreement to sell or transfer of goods and services:
 Delivery Receipts
 Order Slips, Debit/Credit memo
 Purchase order
 Job order
 Provisional/temporary receipt
 Acknowledgement receipt
 Collection receipt
 Cash receipt
 Bill of lading
 Billing statement
 Statement of Account
Accounting Policies
- are set of principles, procedures, and best practices implemented by
the an organization’s management that are relevant in preparing
financial reports. o “It includes accounting methods, measurement
systems, and procedures for disclosures.”
Accounting PRINCIPLES are accounting RULES, while Accounting
POLICIES are ways of the company to adhere to those rules.
Examples of Accounting policies and practices are: o
 Budgeting: Sales, COST, admin expenses, inventories
 General Ledger: Creation of Chart of Accounts, Recording or
Transactions and Journalizing of financial transactions
 Reporting: BOD, Internal, Funding sources, Cash flow & Tax reports
 Cash Management: Cash Receipts, Petty Cash, Bank Reconciliation
 Receivables: Sales Order, Customer Accreditations, Billing & Invoicing
 Payables: Cash Disbursements, Accruals, PO, Credit card, Procurement,
Check vouchers, Liquidation & Reimbursement of expenses
 Payroll: Payroll processing, New hires and termination of employees,
timekeeping, admin salaries allocation procedures
 Cost allocation plan: Direct & Indirect expenses
 Fixed & Other Assets: Assets Control, Capitalization & depreciation,
prepayments, etc

ASSET LIABILTY EQUITY

NORMAL Debit Credit Credit
BALANCE
INCREASE + - -
DECREASE - + +
INCOME +/-
STATEMENT

ACCOUNTING CYCLE
1. Identify and Analyze Transactions
2. Record Journal Entries
3. Post to General Ledger
4. Prepare Unadjusted Trial Balance
5. Make Adjusting Entries
6. Prepare Adjusted Trial Balance
7. Prepare Financial Statement
8. Make Closing Entries
CHART OF ACCOUNTS
- A chart of accounts (COA) is a financial organizational tool that
provides a complete listing of every account in the general ledger of a
company, broken down into subcategories.
 - A chart of accounts (COA) is an index of all the financial accounts in
the general ledger of a company. In short, it is an organizational tool
that provides a digestible breakdown of all the financial transactions
that a company conducted during a specific accounting period, broken
down into subcategories.

BALANCES OF ACCOUNTS
ACCOUNT CATEGORY INCREASES NORMAL BALANCE
RECORDED BY
DEBIT CREDIT DEBIT CREDIT
Assets / /
Liabilities / /
Equity
Capital / /
Withdrawals / /
Income / /
Expense / /

COSO Internal Control — Integrated Framework Principle

Control Environment
- The organization demonstrates a commitment to integrity and ethical values.
- The board of directors demonstrates independence from management and exercises oversight
of the development and performance of internal control.
- Management establishes, with board oversight, structures, reporting lines, and appropriate
authorities and responsibilities in the pursuit of objectives.
- The organization demonstrates a commitment to attract, develop, and retain competent
individuals in alignment with objectives.
- The organization holds individuals accountable for their internal control responsibilities in the
pursuit of objectives

Risk Assessment
- The organization specifies objectives with sufficient clarity to enable the identification and
assessment of risks relating to objectives.
- The organization identifies risks to the achievement of its objectives across the entity and
analyzes risks as a basis for determining how the risks should be managed.
- The organization considers the potential for fraud in assessing risks to the achievement of
objectives.
- The organization identifies and assesses changes that could significantly affect the system of
internal control.
Control Activities
- The organization selects and develops control activities that contribute to the mitigation of risks
to the achievement of objectives to acceptable levels.
- The organization selects and develops general control activities over technology to support the
achievement of objectives.
- The organization deploys control activities through policies that establish what is expected and
procedures that put policies into action.

Information & Communication

- The organization obtains or generates and uses relevant, quality information to support the
functioning of internal control.
- The organization internally communicates information, including objectives and responsibilities
for internal control, necessary to support the functioning of internal control.
- The organization communicates with external parties regarding matters affecting the
functioning of internal control.

Monitoring Activities
- The organization selects, develops, and performs ongoing and/or separate evaluations to
ascertain whether the components of internal control are present and functioning.
- The organization evaluates and communicates internal control deficiencies in a timely manner
to those parties responsible for taking corrective action, including senior management and the
board of directors, as appropriate

MODULE 3 - BOOKS OF ACCOUNTS PART 1

General Journals
- refers to the book of original entries, in which the accountants and bookkeepers
record raw business transactions, in order according to the date of events occur.
- This is the first place whre data is recorded, and every page in the item features dividing
columns for dates, serial numbers, as well as debit or credit records.
- Some organizations keep specialized journals, such as purchase journals or sales
journals, that only record specific types of transactions
Tran
Date Account Titles & Explanation No. Debit Credit
1 2021
2 Oct 01 Cash
 100,000.0
0

100,000.0
3 Ace, Capital 0
4 Initial Investment.
5

Special Journals
1. Sales Journal
- The sales journal lists all credit sales made to customers. Sales returns
and cash sales are not recorded in this journal.
- Entries in the sales journal typically include the date, invoice number,
customer name, and amount.
- Invoices are the source documents that provide this information. In its
most basic form, a sales journal has only one column for recording
transaction amounts. Each entry increases (debits) accounts receivable
and increases (credits) sales.

2. Purchase Journal
- The purchases journal lists all credit purchases of merchandise.
- Entries in this journal usually include the date of the entry, the name of
the supplier, and the amount of the transaction.
- Some companies include columns to identify the invoice date and
credit terms, thereby making the purchases journal a tool that helps
the companies take advantage of discounts just before they expire.
- The purchases journal to the right has only one column for recording
transaction amounts. Each entry increases (debits) purchases and
increases (credits) accounts payable.
3. Cash Receipts Journal
- Transactions that increase cash are recorded in a multi‐column cash
receipts journal. If sales discounts are offered to customers, the journal
includes a separate debit column for sales discounts.
- Credit columns for accounts receivable and for sales are normally
present, but companies that frequently receive cash from other,
specific sources use additional columns to record those types of cash
receipts.
- the cash receipts journal includes a column named Other, which is
used to record various types of cash receipts that occur infrequently
and therefore do not warrant a separate column. For example, cash
receipts from capital investments, bank loans, and interest revenues
are generally recorded in the Other column.
- However, a company that provides consumer loans and receives
interest payments from many customers would probably include a
separate column for interest revenue. Whenever a credit entry affects
accounts receivable or appears in the Other column, the specific
account is identified in the column named Account.

4. Cash Disbursements Journal

- Transactions that decrease cash are recorded in the cash
disbursements journal. The cash disbursements journal to the right has
one debit column for accounts payable and another debit column for
all other types of cash payment transactions.
- It has credit columns for purchases discounts and for cash. Since each
entry debits a control account (accounts payable) or an account listed
in the column named Other, the specific account being debited must
be identified on every line.