Ledgers and Journals

Input

Processing

Output

Cost effectiveness

Useful output

Flexibility

Show transactions in a single account providing up to date information.

Free the general ledger of excessive details.

Provide effective control.

Provide for segregation of duties.

Significantly reduce the number of transactions that require recording in the general journal.

Each transaction can only be recorded in one journal.

• Sales
• Cash Receipts
• Purchases
• Cash Payments
• Sales/Purchases Returns and Allowances

Record sales of inventory on account (credit sales only)

Cash sales recorded in cash receipts journal.

• Dr Accounts Receivable
• Cr Sales

• Dr Cost of Sales
• Cr Inventory

Used to record purchases of inventory on account (Credit purchases only).

Cash purchases recorded in the cash payments journal.

• Dr Inventory
• Cr Accounts Payable

Ability to process large number of transactions quickly.

Automatic posting of transactions.

Error reduction.

Fast response time.

Flexible and fast report production.

Use of inappropriate and/or incompatible software and hardware.

Need for reliable back-up procedures

Lack of computer system skills

Computer viruses and hackers

Fraud and embezzlement