Question :Explain the following sub-systems of Accounting Information System :
(a) Cash and Bank Sub-system
(b) Sales and Accounts Receivable Sub-system
The correct answer is -(a) Cash and Bank Sub-system: The Cash and Bank subsystem is a part of the accounting information system that deals with cash and bank transactions. This subsystem is responsible for tracking and recording all cash and bank-related transactions, including cash receipts, cash payments, bank deposits, and bank withdrawals. The Cash and Bank subsystem ensures that all cash and bank transactions are accurately recorded and that the cash and bank balances are properly maintained.
The Cash and Bank subsystem typically includes the following components:
Cash Receipts: This component records all cash received by the company, including cash sales, cash collections from customers, and other miscellaneous cash receipts.
Cash Payments: This component records all cash payments made by the company, including payments to suppliers, employees, and other expenses.
Bank Deposits: This component records all deposits made to the company’s bank accounts, including deposits from customers and other sources.
Bank Withdrawals: This component records all withdrawals made from the company’s bank accounts, including payments to suppliers, employees, and other expenses.
(b) Sales and Accounts Receivable Sub-system: The Sales and Accounts Receivable subsystem is a part of the accounting information system that deals with sales and accounts receivable transactions. This subsystem is responsible for tracking and recording all sales-related transactions, including sales orders, invoices, and receipts. It also tracks and records all accounts receivable transactions, including customer payments and adjustments.
The Sales and Accounts Receivable subsystem typically includes the following components:
Sales Orders: This component records all sales orders received from customers, including the products or services ordered, the quantity, and the price.
Invoicing: This component generates invoices for customers based on the sales orders, including the total amount due and the payment terms.
Accounts Receivable: This component tracks and records all accounts receivable transactions, including customer payments, credit memos, and adjustments.
Receipts: This component records all customer payments received, including cash, checks, and credit card payments.
Aging: This component tracks the aging of accounts receivable, which is the amount of time that has passed since an invoice was issued and the payment is due.
The Sales and Accounts Receivable subsystem ensures that all sales and accounts receivable transactions are accurately recorded, and that the company’s accounts receivable balances are properly maintained. It is essential for effective management of a company’s cash flow and financial health.
