Hello my friend I need your help again This is a short Discussion


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Hello my friend I need your help again This is a short Discussion 100-150 words Max Creating an Accounting Information System You are the CEO of a newly incorporated retail firm that will sell DKNY® and Tommy Hilfiger® along with other designer clothing. Your job is to set up an accounting information system to maintain appropriate records needed in the eventual preparation of financial statements. Certain principles should be followed in the development of an accounting information system. Identify and explain each of the principles. ch7ppt.pdf 7-1 7 Accounting Information Systems Learning Objectives 1 2 Describe the nature and purpose of a subsidiary ledger. 3 7-2 Explain the basic concepts of an accounting information system. Record transactions in special journals. LEARNING OBJECTIVE 1 Explain the basic concepts of an accounting information system. Accounting information system (AIS) collects and processes transaction data and communicates financial information to decision makers. Includes: Documents that provide evidence of transactions. 7-3 All steps in the accounting cycle. Manual or computerized accounting system. LO 1 Basic Concepts of AIS Cost Effectiveness – Benefits must outweigh the costs. Illustration 7-1 Principles of an efficient and effective accounting information system. Useful Output Flexibility – The system should be sufficiently flexible to meet the resulting changes in the demands made upon it. 7-4 LO 1 Computerized Accounting Systems Software programs (functions include sales, purchases, receivables, payables, cash receipts and disbursements, and payroll). Generate financial statements. Advantages: ► ► Many human errors are eliminated. ► 7-5 Typically enter data only once. More timely information. LO 1 Computerized Accounting Systems CHOOSING A SOFTWARE PACKAGE ENTRY-LEVEL SOFTWARE ► ► Internal control ► Customization ► 7-6 Audit trail ► Easy data access and report preparation Network Compatibility ENTERPRISE RESOURCE PLANNING SYSTEMS LO 1 Ethics Insight Curbing Fraudulent Activity with Software The Sarbanes-Oxley Act (SOX) requires that companies demonstrate that they have adequate controls in place to detect significant fraudulent behavior by employees. The SOX requirements have created a huge market for software that can monitor and trace every recorded transaction and adjusting entry. This enables companies to pinpoint who used the accounting system and when they used it. These systems also require “electronic signatures” by employees for all significant transactions. Such signatures verify that employees have followed all required procedures, and that all actions are properly authorized. One firm that specializes in compliance software had 10 clients prior to SOX and 250 after SOX. Note that small businesses have no standards like SOX and often do not have the resources to implement a fraud–prevention system. As a result, small businesses lose nearly $630 billion to fraud each year. To address this problem, more sophisticated software is being designed for small business fraud prevention. Sources: W. M. Bulkeley and C. Forelle, “Anti-Crime Program: How Corporate Scandals Gave Tech Firms a New Business Line,” Wall Street Journal (December 9, 2005), p. A1; and “New Software Fights Small Business Fraud,” FOX Business (August 9, 2013). Why might this software help reduce fraudulent activity by employees? (Go to WileyPLUS for this answer and additional questions.) 7-7 LO 1 Manual Accounting Systems Perform each step in the accounting cycle by hand. Satisfactory with a low volume of transactions. Must understand manual accounting systems to understand computerized accounting systems. 7-8 LO 1 DO IT! 1 Basic AIS Concepts Indicate whether the following statements are true or false. 1. An accounting information system collects and processes transaction data and communicates financial information to decision-makers. 2. A company typically enters data only once in a manu

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