Archive for October 2011
What is Accounting Information System?
Accounting information system is a system of records, usually computer based, which combines accounting principles and concepts with the benefits of an information system and which is used to analyze and record business transactions for the purpose to prepare financial statements and provide accounting data to its users. Some accounting information systems are still manual, i.e. accounting records are made with a pen, paper and manual entries into accounting books.
How are Such Systems Used?
These systems can be customized to meet the needs of a business. For example, information technology professionals responsible for business processes and information technology professionals responsible for the accounting information system can work together to develop and implement such a system so that it automatically gets information from other sources already in use by the business. Also, the systems can be set up to feature certain functions that are important to the business and eliminate functions minor to the business.
Peaks and Valleys by Spencer Johnson
Spencer Johnson has done very well for himself by taking simple lessons and sharing them in short stories. It is not surprising that USA Today called him “The King of Parables.” “Peaks and Valleys: Making Good And Bad Times Work For You – At Work And In Life” is Johnson’s newest parable, and like those before it, this book contains more than meets the eye.
The book is short, only 99 pages, and some of those contain only one quote. And like his other books, it is a smaller formatted hardcover. However, despite its length, there are some practical pearls of wisdom that if applied will make one’s life more positive. It would be easy to dismiss this book as too simple, or too easy. After all, in the text Johnson refers to the story as common sense. But how many people actually apply the simple lessons of life? Treat others as you want to be treated is a universal lesson found throughout history, but do people actually apply it? Some do of course, but so many don’t.
Often, we spend countless hours, sometimes even lifetimes, searching for some profound truth or magic moment that will enlighten us and make all of our troubles disappear and success and riches materialize in abundances we only dream about. While searching for the complicated, we sometimes fail to listen to the simple. We forget what we know. We don’t apply the lessons we do learn because we are too busy looking for something greater.
What I like about “Peaks and Valleys” and the other books by Spencer Johnson is that they remind us of the simple, and encourage us to apply these simple lessons to our own lives. One of the lessons in “Peaks and Valleys” is to imagine yourself enjoying a better future in such specific, believable detail, that you soon enjoy doing what takes you there. This is not new. Earl Nightengale taught the same lesson in his “Strangest Secret.” Nightengale taught “We become what we think about most of the time.” Others have taught variations of this, and it is so simple that it is often overlooked.
Just because I have heard variations of this lesson before does not mean I didn’t enjoy it here. Like the young man in this book, I too forget these lessons at times, especially when the hustle and bustle and stresses of today’s world seem to overwhelm at times. The short time it took me to read “Peaks and Valleys” was a relaxing reminder of some important concepts that when followed make life better.
I would encourage anyone to take a little time for yourself, find a relaxing place, and enjoy this short parable by Spencer Johnson. Then take a little longer to assess how you can apply the lessons from this story to your own life. If you do, you just might find yourself enjoying more Peaks and realize your Valleys are not as bad as you thought.
Accounting Basic – Understanding the General Ledger
The general ledger contains an entry for every transaction ever made with a business. The general ledger’s first entry should be the one of the business’s transaction, and it should be updated as often as necessary to ensure that every single future transaction is recorded. Since the general ledger holds all of the information regarding every single transaction in the business’s history, it is the core of all of the business’s accounting activity. Balance sheets and income statements are both derived from information contained in the general ledger. Each entry it records the following information:
the date of the transaction, the balance of the transaction, and a description of the transaction
Entering this information is referred to as “posting” a general transaction and the entry itself is referred to as a “post”.
The general ledger may consist of smaller sub-ledgers, or accounts. Examples of commonly used sub-ledgers are accounts receivable sub-ledgers and accounts payable sub-ledgers. Each transaction either posts only in the general ledger or in both sub-ledger and the general ledger.
When a general ledger is set up for the first time, the value of the starting balance and the balances of all of the sub-ledgers should be carefully determined. The worth of a business’s assets such as cash and equipment, for example, should be included in the starting balance of the asset sub-ledger.
A business’s general ledger should be updated to include new transactions as often as it is necessary to prevent the process from becoming cumbersome. Sometimes, a particular sub-ledger should be updated more often than another sub-ledger.
When using a double-entry accounting method, a method which relies on the accounting equation, the general ledger is kept with two opposite posts for each transaction in two separate ledgers or sub-ledgers. This is a beneficial method because it helps ensure that the accounting is kept in balance, and any errors in the accounting are quickly identified.
If it is kept up properly, the general ledger can be a great resource for finding, verifying, and identifying transactions, even if the transactions were completed a relatively long time ago. For example, in case the accounting activities and reports of a business are audited, either externally or internally, a well-kept general ledger can be a source of detailed transaction history.