257
learning outcomes
1
Explain the flow of accounting information
through the accounting paper trail
2
Describe and record transactions in special journals
3
Describe and record transactions in subsidiary
ledgers
4
Identify features of a computerized accounting
system
Appendix
5
Prepare special journals under a periodic
inventory system
Chapter
9
Accounting Information Systems
The Accounting Paper Trail
At this point we have learned how the accounting cycle behaves.We have followed the values from
source documents to journals and ledgers, then to trial balances and financial statements.This is the
paper trail accountants create to ensure all values are stated correctly.
Source documents, which provide evidence that a business transaction has occurred, come in many
different forms.The most common examples of source documentation are usually associated with
accounts payable and accounts receivable. Source documentation includes purchase orders, sales
invoices, cash receipts and contracts.
Accountants use source documentation (in addition to other sources of information) to update
the accounting records of an organization. For example, when the accounting department issues a
sales invoice, the corresponding journal entry regarding the sale should be made. The procedures
surrounding this entry will differ slightly between manual and computerized accounting systems
(e.g. in a computerized accounting system, the revenue and accounts receivable accounts are
automatically updated while the sales invoice is generated). Our focus in this section, however, will
be on manual accounting systems.
Figure 9.1 below outlines the traditional accounting paper trail. Once source documentation is
received, the accountant updates the journal. At specified points, this information is transferred to
the general ledger. At the end of the accounting period, a trial balance is produced. A trial balance
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