Accounting information systems "The processes that gather data, put them into useful form, and communicate the results to management."






Closing entries Journal entries made at the end of an accounting period that set the stage for the next accounting period by clearing the temporary accounts of their balances and transferring them to Retained Earnings; they summarize a period’s revenues and expenses.

Compatibility principle The principle that holds that the design of an accounting information system must be in harmony with the organizational and human factors of the business.

Control principle The principle that holds that an accounting information system must provide all the features of internal control needed to protect the firm’s assets and ensure that data are reliable.

Cost-benefit principle The principle that holds that the benefits derived from an accounting information system must be equal to or greater than its cost.

Crossfooting Adding and subtracting numbers across a row.






Data processing "The means by which an accounting information system gathers data, organizes them into useful forms, and issues the resulting information to users."






Electronic commerce (ecommerce) "The conduct of business transactions on computer networks, including the Internet."

Electronic Data Interchange (EDI) Private links for conducting electronic commerce.

Enterprise resource planning (ERP) systems "Comprehensive, computerized information systems that integrate financial and nonfinancial information about customers, operations, and suppliers in a single database."

Event-to-knowledge (E2K) management A system that uses the Internet to get information to users within and outside a company in the quickest possible way after an event like a sale or a purchase has occurred.

Extensible Business Reporting Language (XBRL) A new computer language developed by accountants and others for the express purpose of identifying and communicating financial information.






Flexibility principle The principle that holds that an accounting information system must be flexible enough to allow for growth in the volume of transactions and for organizational changes.






General ledger systems A group of integrated software programs that accountants use to perform the major accounting functions.

Graphical user interface (GUI) "The employment of symbols, called icons, to represent operations, which makes software easier to use."






Icons Symbols representing operations that appear on a computer screen as part of a graphical user interface.

Income Summary A temporary account used during the closing process that holds a summary of all revenues and expenses before the net income or loss is transferred to the Retained Earnings account.

Internet The world’s largest computer network.






Permanent accounts Balance sheet accounts; accounts whose balances can extend past the end of an accounting period. Also called real accounts.

Post-closing trial balance A trial balance prepared at the end of the accounting period after all adjusting and closing entries have been posted; a final check on the balance of the ledger to ensure that all temporary accounts have zero balances and that total debits equal total credits.






Reversing entry A journal entry made on the first day of a new accounting period that is the exact opposite of an adjusting entry made on the last day of the previous accounting period.






Source documents The written evidence that supports each accounting transaction for each major accounting function.

Spreadsheet A computerized grid of columns and rows into which the user places data or formulas related to cost estimating and other accounting tasks.

Supply-chain management A system that uses the Internet to track the supplies and materials a manufacturer will need on a day-to-day basis.






Temporary accounts "Accounts that show the accumulation of revenues and expenses over one accounting period; at the end of the accounting period, these account balances are transferred to stockholders’ equity. Also called nominal accounts."






Working papers Documents used by accountants to organize their work and to support the information in the financial statements.

Work sheet A type of working paper used as a preliminary step in recording adjusting and closing entries and in the preparation of financial statements.