Specifications

10  Lesson 1 Computer Tutorial 3
The trial balance worksheet also forms the basis of financial statements because it contains a
detailed listing of the balances of all accounts in the general ledger. Adjusting entries may be
added to the trial balance for information not previously recorded in the general ledger.
Examples of adjusting entries include salaries payable, prepaid expenses, and accumulated
amortization. Once identified, each additional entry is recorded as a separate general journal
entry and included on the worksheet. (These entries are also posted to the general ledger —
but not necessarily before the statements are prepared.)
After the trial balance is adjusted, balance sheet accounts (assets, liabilities, and shareholders’
equity accounts) are identified and a balance sheet prepared. Similarly, income statement
accounts (revenue and expense accounts) are identified and an income statement prepared.
Each time a set of financial statements is prepared, it is necessary to go through these steps.
At the end of the fiscal year, another trial balance is prepared. Adjusting entries are recorded
and posted to the general ledger. An adjusted trial balance and final financial statements are
prepared. Closing entries are also prepared. The closing entries are posted to the general
ledger to clear and close the revenue and expense accounts and to arrive at the retained
earnings balance at the end of the fiscal year. This closing process zeros all revenue and
expense accounts, making them ready to record entries for the next fiscal year.
TOPIC 1.5
Computerized accounting systems
There are many different ways of implementing a computerized accounting system. This
description is based on the system used by Accpac.
A computerized accounting system records the same financial information as a manual
accounting system, but with a different method. The general ledger is maintained in a
database. The database contains information on each account in the chart of accounts.
Information kept in the database includes account number, account name, budget figures, and
account balances. Computerized accounting systems are capable of keeping more than one
balance per general ledger account. For example, a balance is kept for each month for each
account so that financial statements can be produced for any month. Balances for previous
years may also be stored.
A general journal is not required. Transactions are entered into subsidiary ledgers or
transaction batches before being posted to the general ledger. For better management control,
transactions are sometimes recorded on paper-based journal entry forms and approved by the
appropriate authority before they are entered into the computerized accounting system.
Because this extra step is quite time-consuming, it is often bypassed, and other forms of
internal control are substituted. For example, the transactions can be entered electronically,
then printed and reviewed by a supervisor prior to posting.
Transactions are entered into the computerized accounting system by one of two methods:
 Batch method — Enter transactions in a batch and then post each transaction batch to the
master table.
or
 Direct-entry method — Enter each transaction directly into the master table.
Each method has its advantages and disadvantages. The batch method enables you to check
the transactions before entering (posting) them to form the permanent record. Also, the
transaction entry can be delegated to clerical staff while the accountant retains control by
reviewing each batch prior to posting. However, batching requires an extra step.