Setup & Computerize

Training, Teaching and Learning Materials (TTLM)
DALLOL TECHNOLOGY & BUSINESS COLLEGE
The Ethiopian TVET-System

ACCOUNTS AND BUDGET SERVICELEVEL IV
Learning
Guide
Unit of Competence Set up and operate a Computerized Accounting
System Module Title Setting up and operate a Computerized
Accounting System
LG EIS ABS4 03 0812
Code: EIS ABS4 M03 0812
TTLM
Code:
TTLM Development Manual Date: September,2017

Compiled by: Business & Finance Department
INTRODUCTION
Welcome to the module “Set up and operate a Computerized Accounting

System”. This learner’s guide was prepared to help you achieve the required
competence in “Accounts and Budget Support Level III ”. This will be the source
of information for you to acquire knowledge attitude and skills in this particular
occupation with minimum supervision or help from your trainer.
Summary of Learning Outcomes
After completing this learning guide, you should be able to:

.
Lo1:- . Implement an integrated accounting system
Lo2:- . Process transactions within the system
Lo3:- . Maintain the system
Lo4:- Produce reports
Lo5:- Ensure system integrity
How to Use this TTLM
o Read through the Learning Guide carefully. It is divided into sections

that cover all the knowledge, skills and attitude that you need.
o Read Information Sheets and complete the Self-Check at the end of
each section to check your progress
o Read and make sure to Practice the activities in the Operation Sheets.
Ask your trainer to show you the correct way to do things or talk to
more experienced person for guidance.
o When you are ready, ask your trainer for institutional assessment and
provide you with feedback from your performance.

Lo1:-. Implement an integrated accounting system

Introduction
The first task of the duty is focusing on an over viewing accounting information which basically
discusses and concentrates on accounting information system, events affecting organization
accounting information system, manual and computer based accounting system, and financial
accounting information system and managerial accounting information system.
The second task devoted to describe the review of the steps in accounting cycle which tries to
review the major steps of the accounting cycles and it also tries to illustrate the general and
special journals.
The third task meant to describe the managerial accounting system that tries to show the
information flows, top down information, bottom up information flow, responsibility center and
performance report.
The fourth and the fifth tasks deals with classifying data and the importance of coding structure
respectively both tasks describe and associate the classification of data and coding and their
application to budget and account coding.
Now a day’s the world is becoming quite different than ever before in information receiving,
processing and releasing to the users. The introduction of computer in the day-to-day activity of
the organization has reduced a problem of accountants in processing and producing out reports to
the users. Computers now become the parts of the accountants in accomplishing theirs tasks and
the development of new systems of doing things in computers makes the more desirable by the
users still. This task will discuss integrated ideas of computer with accounting processing cycle.
Meaning and role of an Information
The data flows throughout the organization and makes it active. There are lot of data
available in the business, at every time a transaction takes place ( Ex. a sale ), some data is
recorded. It could be recorded on paper or in a computer system. Information is very important
part of any business, which helps the managers to take decisions.
The difference between data and information is:

 Data are raw (unprocessed) facts about people, objects, events in an
organization (Ex. all the sales orders for the year)
 Information is data that have been processed and presented in a form suitable for human
interpretation. (how many of each product were ordered in each month, may be shown on
a graph).Information is the lifeblood of any organization, commercial or non profit , it is

essential to sound problem solving and decision making, upon which business success is
built.
Characteristics of Information
The characteristics of good information are relevance, timeliness, accuracy, cost-

effectiveness, reliability, usability, exhaustiveness, and aggregation level. Information is
relevant if it leads to improved decision making. It might also be relevant if it reaffirms a
previous decision. If it does not have anything to do with your problem, it is irrelevant. For
example, information about the weather conditions in Paris in January is relevant if you are
considering a visit to Paris in January. Otherwise, the information is not relevant.
Timeliness refers to the currency of the information presented to the users. Currency of
data or information is the time gap between the occurrences of an event in the field until its
presentation to the user (decision maker). When this amount of time is very short, we describe
the information system as a real-time system.
Accuracy is measured by comparing the data to actual events. The importance of

accurate data varies with the type of decisions that need to be made. Payroll information must be
exact. Approximations simply will not suffice. However, a general estimate of how much staff
time was devoted to a particular activity may be all that is needed.
Value of Information
Information has a great impact on decision making, and hence its value is closely tied to
the decisions that result from its use. Information does not have an absolute universal value. Its
value is related to those who use it, when it is used, and in what situation it is used. In this sense,
information is similar to other commodities. For example, the value of a glass of water is
different for someone who has lost his way in Arctic glaciers than it is to a wanderer in the
Sahara Desert.
Accounting Information System in general

Organizations depend on information system in order to stay competitive.
Information is just as much a resources as plant and equipment. Productivity, which is crucial to
staying competitive, can be increased through better information systems. Accounting as
information system, identifies, collects, process and communicates economic information about
an entity to a wide variety of people. Information is useful data organized such that correct
decisions can be based on it. A system is a collection of resources related such that certain
objective can be achieved.
An accounting information system (AIS) is a collection of resources, such as people and
equipment, designed to transform financial and other data into information. This information is
communicated to a wide variety of decision makers. An accounting information system (AIS)
consists of people, procedures, and information technology. Thus, an accounting information
system (or simply an accounting system) may be defined as “the combination of personnel,
records, and procedures that a business uses to meet its need for financial data” The AIS
performs three important functions in any organization:

1. It collects and stores data about activities and transactions so that the organization can
review what has happened.
2. It processes data into information that is useful for making decision that enable
management to plan, execute, and control activities.
3. It provides adequate controls to safeguard the organization’s assets, including its data.
These controls ensure that the data is available when needed and that it is accurate and
reliable.
Most organizations engage in many similar and repetitive transactions. These transaction types
can be grouped into the five basic cycles, each of which constitutes a basic subsystem in the AIS.
i. The expenditure cycle consists of the activities involved in buying and paying
for goods or services used by the organization.
ii. The production cycle consists of the activities involved in converting raw
materials and labor into finished products. (Only manufacturing companies
have a production cycle; retail organizations buy finished goods for resale to
others.
iii. The human resources/ payroll cycle consists of the activities involved in
hiring and paying employees.
iv. The revenue cycle consists of the activities involved in selling goods or
services and collecting payment for those sales.
v. The financing cycle consisted of those activities involved in obtaining the
necessary funds to run the organization and repaying creditors and distributing
profits to investors.
As shown in the figure below the basic activities in each of the five cycles can be described in
terms of give- to get relation. For example, the expenditure cycle entails giving up cash in order
to get goods and services. Similarly, the revenue cycle entails giving up goods and services in
order to get cash. The Figure below also shows how the five cycles (or subsystems) of the AIS
are related to one another and how each feeds data to the general ledger and reporting system
that provides information to both internal and external users.

Financing Cycle
Funds
Get Give
Cash Cash
Funds
Funds
Human resources Cycle
Expenditure Cycle
Get Get
Cash Data Labor Get Get
Data Cash Good
Data
General Ledger & Reporting
System
Information
For both
Internal and
External users
Giv Production Cycle

e
Get
Finished
Give raw Goods
materials
Revenue Cycle Finished
Get Get Goods
Good
Cash
Factors influencing Design of AIS
Organizational Strategy
Culture
AIS
Information
Technology

Characteristics of accounting information
Accounting information is composed principally of financial data about business transactions, expressed
in terms of money. The recording of transaction data may take various forms. The mere records of
transactions are of little use in making informed judgment and summarized before significant reports
and analyses can be prepared.
Generally, the qualitative characteristics of accounting information are discussed as :

Relevance: - to be relevant, information must be predictive value and /or feedback value. and the
information should be able to related to decisions and able to influence decisions.
Reliability: - it is the extent to which information is verifiable, representational faithful, and neutral.
Verifiable implies consensus among different measures. Representational faith fullness exists when
there is agreement between a measure or description and the phenomenon it purports to represent.
And neutrality is highly related to the establishment of accounting standards.
Comparability: - accounting information enables users to identity and explain similarities and difference
between tow or more assets of economic facts. In order to be comparability to user, the enterprise
should be used uniform accounting procedure in different fiscal year.
Understandability: - the accounting information should be understandable to users who have
reasonable knowledge of business and economic activities and who are willing to study the information
with reasonable diligence.
Who are the Users of accounting information?
A) Internal users
Internal users are users that are directly involved in the day-to-day activities of the organization.
Management needs information in order to formulate plan, to prepare budget, to control activities and
to evaluate performance.
B) External users
External users are users that are not directly involved in the day-to-day activities of the organization.
Those are:
 Owners and potential investors need the information for investment decision.
 Employees and their trade union need the information for stability employment, promotion and
other benefits
 Creditors and suppliers need the information for credit decisions.
 Government agencies need the information for taxation, statistical analysis and regulation
The public also needs the information for environmental decisions
The existence of Accounting Information System makes the works of accountant easier. Because
the system defines what must be done in the coming steps and it serve as a means of bridge
which helps to link the producer of financial reports of the business and the user of the
information. The Accounting Information System consist different steps and procedures that
enable for the preparation of financial statement to take an economic decision. (These steps are
listed and discussed in task 2)
Events affecting organization and accounting information system
Business events, which occur in the business organization and that they need recording are called
business transactions, could affect the accounting system of the organization they need special
consideration in studying the accounting information system. In general, these events could be
classified in to two:
a) Events that affects the accounting system, and
b) Events that do not affect the accounting system
a) Events that affect the accounting system
These events directly affect the accounting system of the business organization. They will have
an increasing or a decreasing effect on the specific account or more than one account at a time.
For instance, sale of equipment, purchase of merchandise inventory, and so on are some business
transaction which affect the accounting system. Basically business transaction, which affects the
accounting information of the business organization, could be classified in to two:
i) Transaction which affecting the balance sheet of the organization, and

ii) Transaction which affecting the income statement of the organization
b) Events that do not affect the accounting system
There are also events, which occurred in the business organization but do not directly, affect the
financial activity of the business. These events may have significant influenced in the works of
accounting. For instance, changing supplier, changing of the accounting system, recruitment of
employee etc could be taken as an example of transactions that do not affect the accounting
records.
Manual and computer-based accounting system
Computer based information systems pervade almost every aspect of our life. Their ability
to solve problems and decisions make them indispensable in business and management.
Businesses continually face problems, which are undesirable situations. Decisions are necessary
when an individual or group must choose a course of action. Computer based information
systems take data as raw material, process the data, and produce information as output.

In a manual and computerized accounting, system, the need for source document is equally
important. Source documents are the basis for recording. Receipts, payment vouchers, bank
statements, balance sheet, check stubs, memorandums, deposit slips and the like are examples for
source documents on the journal.
Manual accounting system employs different vouchers, sheets and cards. The task of accountant
is recording transactions from their source documents on the book of original entry (called
general journal) and next post transactions manually from the journal to the ledger, then
preparing trial balances and work sheet for the preparation of financial reports for the users. In
manual accounting system all the works of accounting is accomplished manually by the person
who in charge for this specific task.
Computer based accounting system is an accounting system of processing information by using

electronic devices, which is faster than the manual accounting system. It is highly preferable than
manual accounting system in its many respects. Some are:
 It process information faster than manual system

 It provides timeliness information
 It provides securities for the recordings of the business as far as one can use start up
codes
 It avoids mechanical works of accountants like adding subtracting. Dividing or
multiplying figures manually
 It alleviates the burden of accountants in filling and documenting reports
 It adds accuracy on the works of accountant
 It tries to minimize the space requirement to store documents on cabinets, shelves and the
like
 It provides easy access to make adjustments with possible authorities to make
adjustments
 It allows protecting unauthorized usage of information from the computer
 It allows a number of users to use the same data at a time through an integrated net works
 It access controller to view the works of their subordinate at remote in their office, and
etc.
There are also a few disadvantages in using computers in day to day activities
 Computer addiction
 Files could be infected with computer virus and worms
 Accessed by unauthorized user if incase codes and secret names are known and etc

Summary of the Accounting Cycle: Computerized and Manual
Computerized System Manual System

Start with the account balances in the Ledger at the  Same.
beginning of the period.
 Analyze and classify business transactions by  Analyze and journalize transactions

type. Access appropriate means for data entry as they occur.
 Computer automatically posts transactions as a  Post journal entries to the ledger
Batch or when entered online. accounts.
 The unadjusted balances are available  Compute the unadjusted balance in
immediately after each posting. each account at the end of the period.
 The trial balance, if needed, can be accessed as a  Enter the trial balance on the work
report. sheet, and complete the work sheet.
 Enter and post the adjusting entries. Print the  Prepare the financial Statements,
financial statements. Run automatic closing Journalize and post the closing
procedure after backing up the period’s entries.
accounting record
 The next period’s opening balances are created  Prepare the post closing trial
automatically as a result of closing. balance. This trial balance becomes
step 1 for the next period
Financial accounting information system and managerial accounting information

System
Based on the user of the accounting information, information is classified in to two. Information
produced for internal users and external users. This is because users of accounting information
are found within the business organization and also outside the business organization, so
information produced and supplied for these users is different in its detail.
There are two fields of accounting, which provide information to the

users-Financial Accounting and Managerial Accounting.
Financial Accounting system is mainly designed to provide relevant, timeliness, reliable and
summarized accounting information for the external users, It gives emphasis for the preparation
of annual financial reports than an interim reports, reports prepared less than one accounting
year, because the year end financial reports are some how summarized and confined than interim
reports.
Managerial Accounting system is designed to provide detail information to the managers in

order to have clear image and to take corrective and amendments near by near for the success of
the business. The Managerial Accounting system is also designed to produce and supply
information for decision making purpose by the managers.

Self Check
Give answers for the following questions and compare your answer for the above question with
the answer given at the back of the module.
1. What is an Accounting systems

2. Differentiate computer Based from and manual Accounting system
3. Distinguish a transaction from an event
4. Mention the importance of computer based accounting system
5. Give an example for events, which do not affect the accounting system and which affects
the accounting system

Lo2:- . Process transactions within the system

Information Sheet: Applying system concepts in accounting
Systems theory
Definition of a System
 A System is an array of components that work together to achieve a common goal, or

multiple goals, by accepting input, processing it, and producing output in an organized
manner.
 For Example, A sound system consists of many electronic and mechanical parts, such as
a laser head, an amplifier, an equalizer, and so on. This system uses input in the form of
electrical power and sound recorded on tape or disc, and processes the input to
reproduce music and other sounds. The components work together to achieve this goal.
 A system is an inter-related set of concepts that work together within and identifiable
boundary to achieve some overall or common objectives. A system is a collection of parts
which are related to each other and which may depend on each other and which may
depend on each other and work together as a coherent whole. A system has components,
interrelation ship among the components, a boundary, a purpose, an environment,
interfaces, input, output, and constraints.

Characteristics of system theory

System does have the following characteristics. Characteristics of a System
A System has nine characteristics

1. Components – A component is either an irreducible part or an aggregate of parts ,
also called as a subsystem
Figure 2.1: Characteristics of System
2. Interrelated Components – The function of one component is tied to the functions

of the others. Output from one is input for another, the dependence of a part on one or
more other parts.
3. Boundary – A system has boundary, within which all of its components are
contained and which establishes the limits of a system, separating it from other
systems. Components within the boundary can be changed whereas systems outside
the boundary cannot be changed.
4. Purpose – All components work together to achieve the overall purpose of the
system.
5. Environment – A system exist within an environment, everything outside the
system’s boundary that influences and / or interacts the system.
6. Interfaces – The points at which the system meets its environment and there are also
interfaces between subsystems.
7. Input – System takes input from its environment
8. Output - System returns output to its environment as a result of its functioning to
achieve the purpose. Output from individual subsystems may be inputs to other
subsystems.
9. Constraints – There are limits to what the system can do (capacity, speed, and
capability), some of these constraints are imposed inside the system and others are imposed by
the environment
Most organized business organizations establish their own Accounting system and any other
information system to run their business in a good manner. Among other system, accounting
system is crucial in the organization because financial resources are in most of the case are very
scarce and their supply is also very limited. So the existence of the accounting system enables
the organization to channel these scarce resources in the best way, to control and prepare reports
of the source and uses of financial resources.
Accounting as a system contains a number of sub-systems, which are independently functional
within whole system. The accounting system may include the following subsystems:
 Sales Transaction processing system

 Purchases Transaction processing systems

 General Ledger Processing system
 Payroll data processing system
 Cash Receipts and Disbursements Transaction processing systems
Elements of an accounting system
An accounting system is comprised of accounting records (checkbooks, Journals, ledgers, etc) and a
series of processes and procedures assigned to staff, volunteers, and/or outside professionals. The goals
of the accounting system are to ensure that financial data and economic transactions are properly
entered into the accounting records and that financial reports necessary for management are prepared
accurately and in a timely fashion. Traditionally, the accounting system includes the following
components:
Chart of Accounts - The chart of accounts is a list of each item which the accounting system tracks.
Accounts are divided into five categories: Assets, Liabilities, Net Assets or Fund Balances, Revenues, and
Expenses. Each account is assigned an identifying number for use within the accounting system.
General Ledger - The general ledger organizes information by account. The chart of accounts acts as the
table of contents to the general ledger. In a manual system, summary totals form all of the journals are
entered into the general ledger each month, which maintains a year- to date balance for each account.
In a computerized system, data is typically entered into the system only once. Once the entry has been
approved by the user, the software includes the information in all reports in which the relevant account
number appears. Many software packages allow the user to produce a general ledger which shows each
transaction included in the balance of each account. For example:
 Journals and Subsidiary Journals -Journals, also called books of original entry, are used to
systematically record accounting transactions before they are entered into the general ledger.
Journals organize information chronologically and by transaction type (receipts disbursements,
other).
The process of transferring information from the journals to the general ledger is called posting.
Computerized accounting systems often require users to post all income and expense transactions
through the accounts receivable and payable journals. Other automated systems allow users to post to
cash disbursements or receipts journals, but cannot produce detailed financial information from these
journals (such as a list of checks written presented in numerical order.)
Checkbook - In very small organizations, the checkbook may serve as a combined ledger and journal.
Most financial transactions will pass through the checkbook, where receipts are deposited and from
which disbursements are made.
Accounting Procedures Manual - The accounting procedures manual is a record of the policies and
procedures for handling financial transactions. The manual can be simple description of how financial
functions are handled (e.g. paying bills, depositing cash and transferring money between funds) and
who is responsible for what. The accounting procedures manual is also useful when there is a
changeover in financial management staff.

2.2.2 Subsystems of the Accounting system

Each subsystem of the accounting together forms the big picture when they work together. Every
subsystem in coordination can create the required information because there is an interrelation
ship between these subsystems. The outputs of the one subsystem become an input to the other
subsystem. For example, purchase of merchandise inventory by purchasing department could be
an input to the subsystem of the sales department. Below is shown a diagram that show the inter
relation ship of subsystems in the organization
Sales order Billing Account Cash

processing General Financial
Receivabl Receipts
Ledger Reporting
Sales
Analysis Accounts Cash
payable Disburseme
Warehouse Payroll
Purchases Work in process
Finished goods
Raw material
AdditionProductionof
directTransactionlabor, Time
directProcessing
Keeping
SystemMaterial,
FOH to the
process.
Reviewing the Systems Approach to Problem solving

Developments of an Accounting System

Good accounting systems are carefully planned, designed, installed, managed, and refined.
Generally, developing an accounting system involves the following four phases or stages
(analysis, design implementation and follow up):
Analysis - Analysis involves determining internal and external information need, identifying sources of
information and the need for controls, studying alternatives. If an existing system is being analyzed, its
strengths and weaknesses must be identified
Design - For a new system, forms and documents must be designed; methods and procedures
selected from alternatives; job descriptions prepared; controls integrated; reports formatted; and
equipment selected. Successful system design depends largely upon the capabilities of the
designer. Redesigning an existing system may involve only minor changes, a complete overhaul,
or replacement of a manual system by a computerized system.
Implementation - Whether a new accounting system is created or creating or an existing system
is revised, the plan and design must be implemented. New or revised documents, procedures,
reports, and processing equipment must be installed and made operational. Personnel must be
hired, trained, and closely supervised through a start up or transition period.
Follow-up - After the system is up and running, it must be evaluate and monitored for weaknesses and
breakdowns. Also, its effectiveness and efficiency must be compared to designed and organizational
objectives. Corrections in design or changes in implementing may be necessary. Both internal and
external audit procedures provide feedback about the soundness of the system
Highlights the relationship of these in the life cycle of the accounting system
Analysis
Planning and identifying
Information needs and sources.
Follow-up Design
Evaluating and monitoring Creating forms, documents,
effectiveness and efficiency and Procedures job descriptions, and
Implementation
Installing the system, training,
personnel, and making the system
wholly operational,
These phases, which represent the life cycle of an accounting system, suggest that few systems
remain the same forever. As experiences and knowledge are obtained, and as technological and
organizational changes occur, the accounting system may also have to grow and changes.
Information System
Figure 2.2: The basic components of a computer based information system- People, Processes,
Information technology and informal interactions
An Information System is an arrangement of people, data, processes, interfaces,

networks and technology that interact for the purpose of supporting and improving both day-to-
day operations in a business (data processing) as well as supporting the problem solving and
decision making needs of management (information services).
Every business function in every business sector uses information systems. From
government agencies to manufacturing, from accounting to marketing, information systems are
key tools in transaction processing, decision making, problem solving, and operations of all
organizations.
For Example, One of the greatest improvements in the airline industry is the
E-ticket. The electronic ticket is not really a ticket. The passenger is reserved a seat on a flight,
but no details is printed on a ticket. The only paper confirmation is a receipt sent to the
passenger via regular mail. At the airport, the passenger checks in by showing a photo ID. The
attendant verifies the details by retrieving the reservation record from the computer terminal at
the gate.
Passengers like this arrangement because it is convenient. An increasing number of

passengers, especially business travelers fly only with e-tickets. For example, 41% of all tickets
Northwest Airlines issues in 1998 were e-tickets. Little wonder the airlines love e-tickets:
handling an e-ticket costs $1 compared with the $8 cost of a paper ticket.
(Source: Communication of the ACM, August 1998, Vol 41)
Several trends have made the use of ISs very important in business
 Computers’ power has grown tremendously, while their prices have dropped
 Computer programs’ variety and ingenuity have increased
 Quick and reliable communication lines and access to the internet and WWW(World
Wide Web) have become widely available and affordable
 The fast growth of the internet has opened opportunities, as well as competition, in global
markets.
 An increasing ratio of the workforce is computer literate.

 In this environment, organizations will quickly lag behind if they do not take advantage
of this progress and use these technologies and skills to meet their goals.
The components of an Information System
Data: Input that the system takes to produce information

 Are raw facts about the organization and its business transactions?
 Raw facts, figures, images or sounds collected from observations or recordings
about events, objects or people, which can be stored on a manual or computer
based medium.
 Most data items have little meaning and use buy themselves.
 Are a by-product of doing business
Information:
 Is data that has been refined and organized by processing a purposeful
intelligence?
 The latter, purposeful intelligence is crucial to the definition people
provide the purpose and the intelligence that produces true information.
 Information is a resource created from the data to serve the management
and decision making needs of the business.
 Information has meaning within a specific context and is useful for
making a decision. Solving a problem, performing a task etc. Information
systems transform data into information.
Hardware: A computer and its peripherals: input, output, storage devices, and data
communication equipments.
Software: Sets of instructions that tell the computer how to take data in, how to process it,
how to display information, and how to store data and information.
Telecommunications: Hardware and software that facilitates fast transmission and reception
of text, pictures, sound, and animation in the form of electronic data.
People: Information systems professionals and users who analyze organizational information
needs, design and construct information systems, write computer programs, operate the
hardware, and maintain software.
 Procedures: Rules of achieving optimal and secure operations in data processing.
Procedures include in running different applications on the computer and security
measures.
Types of Information Systems
There are many different types of Information systems for different types of organizations, for
different functions within organizations, for different business needs, and at different
management levels of an organization. Information systems in business range from Transaction

Processing System that records events such as sales, to Expert Systems, i.e, computer programs
that provide advice and make unnecessary the expensive services of a human expert.
The main types of IS are
 Transaction Processing Systems
 Management Information Systems
 Decision Support Systems
 Expert Systems
 Office automation systems
Transaction Processing Systems (TPS)

 TPS are systems such as cash registers, ATMs, and other systems that record data and
perform basic processing, which may result in simple reports.
 TPS automates the handling and capture of data about transactions or business activities
 Accepted transactions are stored in the system database
The goal of TPS development is to improve transaction processing by speeding it up, using fewer
people, improving efficiency and accuracy, integrating it with other organizational information
systems, or providing information not previously available.
Transaction Processing Systems (TPS)

 TPS are systems such as cash registers, ATMs, and other systems that record data and
perform basic processing, which may result in simple reports.
 TPS automates the handling and capture of data about transactions or business activities
 Accepted transactions are stored in the system database
 The goal of TPS development is to improve transaction processing by speeding it up,
using fewer people, improving efficiency and accuracy, integrating it with other
organizational information systems, or providing information not previously available.
Management Information System (MIS)
 It is a computer based information systems for planning, control, decision making, and
problem solving, rather than jus for reporting transactions.
 These new types of information systems are know as Management Information System.
 The Extension of MIS are DSS, EIS (Executive Information Systems), and Expert
Systems
 The type of MIS one uses depends on one’s management level ( Operational, Tactical,
Strategically)
 MIS takes the raw data available through a TPS and converts them into a meaningful
aggregated from.

Figure 2.3: Types of Information Systems
Decision support System (DSS)

 Helps the manager to take decisions by analyzing the data
 It provides an interactive environment in which decision maker can quickly manipulate
data and models of business operations
 DSS has three parts, the first part is composed of a database, extracted from a TPS or
MIS
 The second part consists of mathematical or graphical models of business processes. The
third part is made up of a user interface, which provides a way for the decision maker to
communicate with the DSS.
Expert Systems (ES)

 An ES is different from other information systems, it replicates the decision making
process by applying rules to information in the way that an expert would
 An ES is developed for a particular area of knowledge or domain, Ex Medical diagnosis,
Weather forecasting, etc.
 The ES asks questions, and the end user supplies the answers, rules applied on the
answers and the ES provides a recommendation.
 The focus on developing and ES is acquiring the knowledge of the expert in the particular
problem domain. Knowledge engineers perform knowledge acquisition.
Management Information System (MIS)

 It is a computer based information systems for planning, control, decision making, and
problem solving, rather than jus for reporting transactions.
 These new types of information systems are know as Management Information System.
 The Extension of MIS are DSS, EIS (Executive Information Systems), and Expert
Systems

 The type of MIS one uses depends on one’s management level ( Operational, Tactical,
Strategically)
 MIS takes the raw data available through a TPS and converts them into a meaningful
aggregated from.
Figure 2.4: Types of Information Systems
Decision support System (DSS)

 Helps the manager to take decisions by analyzing the data
 It provides an interactive environment in which decision maker can quickly manipulate
data and models of business operations
 DSS has three parts, the first part is composed of a database, extracted from a TPS or
MIS
 The second part consists of mathematical or graphical models of business processes. The
third part is made up of a user interface that provides a way for the decision maker to
communicate with the DSS.
Expert Systems (ES)

 An ES is different from other information systems, it replicates the decision making
process by applying rules to information in the way that an expert would
 An ES is developed for a particular area of knowledge or domain, Example Medical
diagnosis, Weather forecasting, etc.
 The ES asks questions, and the end user supplies the answers, rules applied on the
answers and the ES provides a recommendation.
 The focus on developing and ES is acquiring the knowledge of the expert in the particular
problem domain. Knowledge engineers perform knowledge acquisition.
This system helps especially top-level managers by providing a good assistance to solve
unstructured problems of the organization. Such kinds of problem cannot be determined in

advance so managers rely on Decision Support System to get a clue to generate out a solution for
decision-making purpose
Office Automation (OA)
This system supports the wide range of business office activities that provide for improved
workflow and communication between workers, regardless of whether or not those workers are
located in the same office. It includes fax, email, word processing and the like.
System performance
System performance can be measured by its effectiveness and efficiency:
Effectiveness: The degree to which set goals are achieved. It is

therefore concerned with the results or the outputs
of a system.
Efficiency: a measure of the use of inputs (or resources) to
achieve results. How much money is used to generate
a certain level of sales?
The efficiency and effectiveness of a system can be measured by having the following two
elements built into the system.
Feedback: flow f information from the output component to the decision-maker concerning the
system’s output performance. Indicates if the system performance is meeting standards based on
this the decision-maker, who acts as a control, may decide to modify the inputs r the processes or
both.
Control: major system functions, which monitors and evaluates system feedback, to establish to
what degree system goals are being achieved.
A key element in the success of a system is its ready adoption t changes in its environment. This
again emphasizes the need for monitoring and control of systems based on relevant and timely
feedback.
Self Check
1.Define a system?
2.What is boundary?an Interface?
3.What are the three levels of management?
4.Mention some systems applied in accounting.
5.List the three types of problems

Lo3:- . Maintain the System
Duty 3 Processing Accounting Data in Computer-Based System
Task 1 identifying the usefulness of computer-based Accounting system
3.11 Approaches to accounting data processing
Organization normally can use different approaches to process their data in order to produce
financial reports, among these approaches the following are some of the way adopt by the
organization;
 Batch sequential processing system. In this system data are accumulated based on their
sequence, it could be by their occurrence date, type or codes, and entered together either
at the end of the date or some times later in the accounting period.
 Batch system- this system considers grouping together data with out their sequence and
enter at some times latter in the accounting period or at the end of the day.
 Online real time system- this system allows entering data immediately when they occur
from their sources. At the same time users also can have quick reports about the current
trading activities of the organization.
 Direct access this system allows the user to have direct access immediately when ever
the data are entered in to the computer. Particularly this approach enable the controller to
see all the activities, error committed by subordinates, and to give correction
immediately when it occurs.
 Indexed sequential in this approaches data need to be given indexed numbers
sequentially before they entered in to the system. The indexed number could be the
invoice or the receipt number order that help the user to enter data in to the computer,
which means the first dispatch invoice need to be entered first before the second
dispatched invoice.
Manual accounting Data Processing system
In manual accounting data processing system, extensively, bookkeepers are engaged in

identifying, measuring, recording, summarizing, reporting and interpreting financial data to help
decision makers. Normally, when the organization employs manual accounting system, there
should be a hard copy of different formats of business in which transaction will be recorded, like
journals, ledgers, trial balance, worksheet, etc. In processing financial data manually, bookkeeper
totally tied up in calculation, computation and prescribing records routinely and it leads them to
have monotonous life.

In manual data processing system, it takes more than two or three months for the preparation of
financial reports after the end of the accounting year. And again it is true that reporting activities
of accounting information system are cyclical, although transactions processing activities are
more or less continuous. Transactions are summarized t the end of each period for series of
report measuring the organization financial status and the results of operation during the period,
The end of a period reports usually include at least a balance sheet and an income statement: in a
medium and large size organization these reports are accompanied with a number of schedules
for each of several or dozens of affiliated organization, so how could manual-report preparation
take responsibility to submit these all information timely.
3.2.3 Computer based Data Processing System
Computerized accounting systems have replaced manual systems in many organizations- even small
businesses. In discussing the three stages of data processing- input process and output- we can observe
the difference between a computerized accounting system and a manual accounting system. The
relationship among the three stages of data processing is shown in the following Figure
ACCOUNTING INFORMATION SYSTEM
Input (Data) Processing Output (Report)

(Accounting)
The Three Stages of Data Processing

Inputs represent data from source documents, such as sales receipts, bank deposit slips, and fax
orders and other telecommunications. Inputs are usually grouped by type. For example, a firm
would enter cash- sale transactions separately from credit sales and purchase transactions. In
manual accounting system, processing includes journalizing transactions, posting to the
accounts, and preparing the financial statements. A computerized system also processes but
without the intermediate steps (journal, ledger, and trial balance).
Outputs are the reports used for decision making, including the financial statements (income
statement, balance sheet, and so on). Many companies make better decision- and prospering-
because of the reports produced by their accounting system. From computer’s view point, a trial
balance is also a report. But a manual system would treat the trial balance as a processing step
leading to the statement. The following figure is an overview of computerized accounting system

Overview of a Computerized Accounting System
COMPUTERIZED ACCOUNTING SYSTEM

ACCOUNTING RECORDS
Personnel input Journals Ledgers

transactionsrequest reports. Other records
Protect records
Posted Accessed
for reports
INPUT
Hardwar
Centere Printed Output
d to paper
DATA SOFTWARE REPORTS
PROCESSING
Except decision making position, computer play a great role in the accounting information
system. The developments of accounting software application alleviate the problem of producing
financial reports on demand-because data are processed with the maximum accurate speed to
produce the required financial reports
Computer-based data processing system do have the following advantages: in addition,
mentioned above. These are:
 It fasters processing of transaction and producing reports

 It gather accuracy in computations and comparisons of data, reports, etc
 It cost effectiveness processing and storing of data and files
 It provides large range of choices for entering data and providing outputs
 It provides higher productivity for employer and manager, especially when they
effectively use computers to aid in their routine activity and
 It eliminates redundancy and storage cost
These and other improvements make computer more desirable than manual accounting system.
Computers manipulate transaction more quickly, accurately and inexpensively than manual
based data processing system. It also involves huge quantities of data that need to be stored and
accessed frequently by bookkeepers and managers.
Whenever, the organization selects computer-based data processing system it has two approaches
to process accounting data. These are batch processing and on line real time processing
approach.
Batch processing system
When so ever batch-processing system is employed to be used, input data are gathered and
processing periodically in discrete groups: for examples, accumulating all of a day credit and
cash sales vouchers and processing them as a “Batch “at the end of that day. Although batch
computer system do not provide up-to-the-minute information, they are often efficient than other
types of systems.
On Line Real Time Processing
This data processing system allows accesses to users to use on line information from the stored
data through the system. When so ever the online system is in use data and information are
entered from the source of the system regardless of remoteness of the location, user can have
accesses to work with the entered information a data. In the case of online system, some times
information (transaction and data) are held and stored in the file before they are posted. In this
system the accounting data are always up-dated and completed and they are used to up-date the
customer account immediately.
Activity 3.1
1. What is batch sequential system?

2. State the real-time data processing system. 3What
direct accesses allow to a user of a computer?
4. Compare computer based and manual accounting systems?
After the emergency of computer the information technology get wide advancement in all
aspects. One of the advancement is the development of different types of software that can make
easier the life of human being. This software is a language which helps the user of the computer
to communicate with the computers. Normally, software are classified in to two application
software and operating software. The ideas of the two soft wares are discussed below.
Computer software in general
Basically software is language that enables us to communicate effectively with the computers
and its accessories. Software is also a set of sequential orders designed to perform a specific task
in the field of information science. In general software is classified into two. These are system
software operating system software and application software. Both are intangible elements of
computer, which means they can not be touched as other accessories of the computer.
System Software
 Definition: the term software refers to a sequence of instructions given to the

computer.
Software is also sometimes referred to as a program or an application. Examples of
software include a word-processing program, a computer game or a student database.
Software can be said to be intangible (i.e. you cannot touch it).

The software is a series of very simple computer instructions carefully organized to complete
complex tasks. These instructions are written in programming languages (like BASIC, PASCAL,
C...) to help simplify the development of applications
 If you use a player piano as an analogy, the piano can be thought of as the hardware and
the roll of music as the software.
These are general program written for the system, which provide the environment to facilitate
writing of Application software. Some of the system programs are given below:
Compiler: It is a translator system program used to translate a High-level language program into
a Machine language program.
Assembler: It is another translator program used to translate an Assembly language program

into a Machine language program.
Interpreter: It is also a translator system program used to translate a High level language
program into a Machine language program, but it translates and executes line by line.
Loader: It is a system program used to store the machine language program into the memory of
the computer.
Data management software-this software enable to store. Retrieve, and communicate dose of
data in the computers. Especially this programs helps to write programs which can store and easy
to accesses data stored in the program with the highest speed and maximum accuracy.
Application Software
It is the set of programs necessary to carry out operations for a specified application. In contrast
of the operating system it can solve a specific business problem and works in collaboration with
the operating system. It is the operating system software that helps the user to design application
software. It is used:
 To solve a set of equations

 To process examination results
 To prepare a Pay-Bill for an organization
 To prepare Electricity-Bill for each month
Types of accounting application software:
Application software uses the operating system software and provides the real functionality of a
computer. Applications include:

Word Processing (MS Word, WordPerfect, Ami...)

- Spreadsheets (Lotus 123, MS Excel...)
- Database (DBase, Fox Pro, Access, Oracle, SQL server...)
- Presentation (MS PowerPoint, Persuasion...)
- Internet Browsers (Netscape Navigator, MS Internet Explorer)
- Games
- Peachtree accounting, Quick book. Sun, personal finance managers, small

business accounting and tax software
Accounting application software specifically designed to assist in storing transactions, retrieve

them for use at demand and to produce out quick report for decision making purpose. The
following are some of the application software that assists the accounting work:
Personal finance managers let the user to keep recordings of income and expenses, write
checks, helps to communicate on line with the user banker in depositing and making payments,
and assists in planning the goal of the organization.
Small business accounting and tax software-this also helps to accomplish all the accounting
works and tack any data relating tax and alleviate the problem of organization their claims and
payables against the tax collecting agency.
Peach tree Accounting- it is well developed application software and can serve for multi types
of organization in order to handle their transactions.
Activity3.2
Answer the following questions in writing and check your answers with the answers provided at
the back of the module
1. Define application software, operating system, compiler, interpreter, assembler, and data
management software.
2. Identify the purpose of data management software.
3. Identify types of application software.
 Peachtree accounting in general

 Working with companies
Introduction
Peachtree Accounting is multidimensional application software that can serve accounting to

store, retrieve and produce timely information to the users. Especially this course is designed in
order to handle and process for both business and non business organization accounting reports.
In general Peachtree is a complete application program that can solve a problem of accuracy,
time and cost for the organization
Peachtree Accounting in General
Peachtree accounting is the most complete, powerful and fully integrated accounting system. It
combines marketing, financial and personnel information in order to provide with necessary
tools to efficient control of business operation. While you move around in Peachtree accounting,
you can encounter with the standard procedures for moving around in it. These standards are:
 Choosing menus option

 The navigation aid
 The short cut keys
 The icon bar
 The status bar
 Smart guides
In Peachtree accounting, there is usually more than one way to accomplish tasks. Some people
like to use a mouse, and some prefer entering keyboard commands. Some people prefer the
traditional menu with words, while some like to select from an icon, a graphical representation of
tasks. Peachtree accounting lets you make the choice.
Choosing menus options
Menus run along the top of the screen. To open menu you generally select the menu name. Once
the menu opens. You can select the desired option.
File menu:- the file menu is used to setup, and open companies within Peachtree accounting. It
is the corridor for interfacing with printer, backing up and restoring, and importing or exporting
information. You also use it to update payroll tax tables.
Edit menu: use the edit menu to work with information in records or transactions. There are two
versions of the edit menu, depending on whether you have a record selected or a transactions
selected.
Maintains menu: use this menu to setup and change information about your (customer,
vendors, employees, inventory items, jobs, company information,
default information, memorized transactions, sales taxes, and users passwords.
Tasks menu: use this menu to pay vendors, receive payments from customers, pay
Employees, and make adjustments to your general journal. You can also
Use this to setup and make payments using the electric bill payment
Services, record time and expenses tickets, adjust inventory, make assemblies,
reconcile your bank account, and void checks. You can also change accounting period and
close the fiscal year.
Analysis menu: use this menu to manage different aspects of your business using the manager
series. The cash manager is used to monitor current cash flow and projected cash flow in
graphical and spreadsheet formals. The collection manager is used to manage your accounts
receivables, money that is owed to you. You can create collections letters using collection
manager. The payment manager is used to analyze payments you owe to vendors. You can make
payments from this area as well.
Option Menu: use options to set up how you want smart data entry to work, how you want
decimal point inserted in numbers, how you want the list edit box displayed on task menu items,
and to set up your modern for making payments by electronic bill payment.
Reports menu: use the reports menu to print reports, forms, and financial statements, as well as
designing them.

Window menu: use this menu to decide how you want your desktop to look.
Help menu: use this menu for any questions you may have on the program, technical support,
and Peachtree products and services. You can also use it to run tutorials for windows and
Peachtree accounting.
The following is Peachtree accounting screen. look it toughly and you will use it repeatedly.
Window 1
The Navigation Aids

Navigationaids provide an easy way for you to get around in Peachtree accounting. You can use
navigation aids to access certain windows. Navigation aids automatically display at the bottom of
the Peachtree accounting window and can be turned off from the options menu. For example if
you click the payroll, the Peachtree navigation aid displays.

Window 2
Each navigation aid contains pictures to help you remember activities that you perform in
Peachtree accounting. Click the icon to go to the selected area.
Notice that the folder is divided into three sections: Maintain Tasks, and Reports. These sections
correspond to the menu structure in Peachtree accounting.
 Maintain refers to records or lists that you would help on file. In purchases, you would
maintain your list of vendors and the inventory items that you purchase from these
venders.
 Tasks refer to every day activities that you perform. For instance, if you ordered items
from your vendors, you would enter a purchase order. Once the items arrive, you would
enter a vendor invoice using the purchase/Receive Inventory window. Finally, you
would make payments to your vendor for the purchase.
 Reports provide useful information about the selected accounting area in purchases; the
following reports are available: purchases journal, cash disbursements journal,
purchased/ payable reports, and general ledger.
The Status Bar
The status bar displays at the bottom of your screen when you are in Peachtree Accounting. It
offers a brief explanation of the current field or text box. And the text changes as the cursor
moves. It also shows the current date and the current accounting period. If you set up alerts;
alarm clock will appear in the status bar to alert you.
The Smart Guide
The smart guide is a window that pops up to explain fields or topics that may need onscreen
explanation. You can move the smart guide out of your way and still see it. Move your mouse

pointer any where inside the smart guide. The pointer turns into a hand click and bold down the
mouse button, and you can drag the smart guide anywhere on the screen.
Working with Companies
Peachtree accounting walks you step-by-step through the process of creating a new company.
This makes it easier to get your new company started, and work at your own pace while creating
it. You use the new company selection to set up basic information about your company and
specific information about how you want your company to work. You can choose to copy your
chart of accounts from the sample charts of accounts for various types of business, or create you
own.
You must complete all of the information in part one of the new company set up. However, you
do not have to complete every thing in part two before you create the company and begin work.
Activty3.3
Consider the following question and answer them separately in writing and check your answer
with the answers provided at the back of this module
1. What is Peachtree accounting?
2. Describe the nature of Peachtree accounting
3. Describe the ways of getting started Peachtree accounting
Peachtree accounting walks you step-by-step through the process of creating a new company.
This makes it easier to get your new company started, and work at your own pace while you are
creating it because you can take a break and resume where you left off.
Steps in creating a company
Peachtree accounting's New Company setup is divided into two distinct parts. Part one contains
questions regarding specific information about the company you want to set up. Part two takes
you through the default areas and shows you the variables set up for you based on the
information you selected in part one. You can change these settings in part two, or after you
create your new company.
Before your set up a company in Peachtree Accounting you may want to make some initial
decisions based on your preferences and legal regulations that apply to you. These may include
your accounting method, type of business and your accounting periods. To best utilize the
flexible functionality of Peachtree Accounting. You should plan the way you want to set up your
company before actually starting the New Company Setup process.
You must complete all of the information in par one of the New Company Setup.
However, you do not have to complete everything in part two before you create the
company and begin work. The tables below list the information that is requested in part
1 and 2 of the New Company Setup. Some of these are required but most can be
changed after you create you new company.

Parts one and two of new company setup provide some descriptive information on how choices
on the screen affect the way your company will be created.
Part one - Basic Company Information
 Company Name
 Address, city, state, zip
 Country
 Phone
 Fax
 Federal Employer ID number
 State employer ID number
 State unemployment ID number
 Business type (corporation, S. Corporation, Sole Proprietorship, partnership)
 Chart of accounts
 Accounting method (cash or accrual)
 Posting method (batch or real-time)
 Setup of accounting periods
 Fiscal year
 First period for entering data
Part Two - Default Information
Customer Defaults
 Payment terms
 Discount information
 General ledger link accounts (sales, discounts taken)
 Aging information
 Finance changes information
 Custom fields
Statement and invoice options

 Print options
 Dunning messages
Vendor defaults
 Costing method
 General ledger link accounts (for each type of inventory item)
 Shipping methods
 Item tax types
 Custom fields
Payroll defaults
 State and locality defaults

 Tips or meals
 40Ik
 General ledger link accounts
 Names and account number for the hours fields
 Names and account number for the salary fields
Job tracking defaults

 Custom fields
Note: Peachtree accounting close down while you set up a new company. Therefore, you cannot
switch back and forth (ALT-TAB) between Peachtree accounting is opened for either: a) the last
company you were in, or b) the company you just created, if you completed part one of new
company setup.
You can run new company setup in two different scenarios, which include the following:
 When you setup your first company in Peachtree accounting for windows
 When you set up additional new company in Peachtree accounting while working in
another company on the system.
The following procedures describe how to start the new company setup in the above mentioned
situations.
Creating a new company
You can follow this procedure for setting up your first company or an additional new company
on your system.
1. From the file menu, select new company.
If the start-up screen appears, you can click the set up button if you were in another company,
warning window displays, telling you that opening a new company will close the current
company.
Window 3
2. Select Ok (the Ok button is already highlighted)

3. Click cancel to display the start-up screen for the setup menu.
If you want to simply enter information and skip the explanation, you can click the show full text
option from the options menu. If you want to enter information as you are guided, use your
mouse to click on the next page
Window 4
Note: If you have partially saved a company that you started creating in an earlier
session. The name of that company will appear in the sessions found list and you can
choose to restart that session. Or, you can click the start new session button and start
fresh.
Saving and Resuming New Company Sessions
You can stop at any time when creating a new company, just save your session, and
resume later, when it is convenient.
To Save a New Company Setup Session
1. From the file menu of the New Company, select Save As.
2. Name the session, using a description of up to eight characters.
3. Exit to Peachtree accounting. You're returned to either the last company you
were in, or to the company you just created, if you completed part one the New
Company Setup.
To Resume a Session

1. From the file menu of Peachtree Accounting, select New Company to

open the New Company Setup program.
2. From the file menu of the New Company Setup window, select Open
3. Enter or select the name of the session you want to resume.
Moving Around in New Company Setup
Navigating in New Company Setup is simple. The right arrow button, in the upper right corner of
the window, proceeds to the next window or step. The left arrow returns you to the previous
window.
Click on any of the other buttons (file, part one, par two, options, help) to open menus of
additional choices. There is always help available in new company setup; just click help button.
ENTERING NEW COMPANY SETUP: PART ONE
Part one of New Company Setup allows you to set up the following areas of information about
your company:
Company information: Enter your company name, address, telephone number, and fax number.
Tax ID Numbers: - Enter your Federal and State Employer ID and your State Unemployment ID
(if applicable).
Business Type: Define the kind of business you run, such as corporation or partnership. The
Business types are partnership, Sole proprietorship, Corporation and S.
Corporation. Your selection here determines the makeup of the equity section
of your chart of Account.
Business Type Accounts Created
Corporation or S. Corporation Common Stock

Paid-in Capital
Retained Earnings
Dividends Paid
Partnership Beginning Equity
Partner's contribution
Partner's Draw
Sole Proprietorship Beginning Equity
Owner's Draw

Chart of Accounts: The chart of accounts is nothing more than a list of categories into which
you transaction are summarized. It contains a code, referred to as an
account ID (equivalent to account number); a description for each account,
and a type code. You can select from over 70 standardized charts of
accounts of sample types of businesses- from accounting to Video rental
companies. You can view each sample chart of accounts first, by selecting
to set up a new company from the sample description list. Then, you can
highlight the sample company you want to view and click the view button.
If you need to print a sample chart of accounts, go into Peachtree
accounting, select the help contents, click the reference icon, and then
select simple charts of accounts.
If you choose an existing Peachtree accounting for Windows Company, then you can continue
through the entire new company setup program (including part two). After doing so you will be
presented with a review of the information you have provided. After reviewing the information,
you can choose to create your new company. You can also delay your decision, by saving and
resuming your new company session.
Note: You cannot add or modify accounts at this point. However, you can do so when you are
using the Peachtree accounting program by selecting the chart of accounts option from the
maintain menu.
Cash or Accrual: When you set up your company, you must indicate if you will use a cash or
accrual accounting method. The cash basis method records income when
cash is received. and expenses when cash is paid out. Accrual accounting
records income and expenses at the time of transaction regardless of when
the cash is exchanged. If you choose cash-basis accounting, Peachtree
accounting updates your income or expense accounts only when you receive
or disburse checks. However, the invoice is recorded in the vendor or
customer ledger. That way, you still have aging information available.
WARNNING: - The choice between cash-basis and accrual accounting is final. You cannot
change this decision later. The only way to change accounting methods is by
starting a mew company all over again.
Real-time or Batch: Select if you want Peachtree accounting to post your transactions as they
are entered (real-time) or if you want to wait and post transactions in a
group (batch posting). Remember that in batch posting, the transactions you
enter are saved to a temporary holding area, where you can review them
before posting the batch to the general ledger. In real-time posting, the
transactions you enter are posted as you save them. In fact, if you choose
real-time posting, the save button in task screens becomes a post button.
However, you can still edit these transactions in either of the methods.
You must make a choice between real-time and batch posting when you
create a new company; however, you can change this option at any time.

Dates and Accounting periods: Select the number of accounting periods in your fiscal year,
which year is the first year in which you will begin entering data, and what
is the start date of your fiscal year. You can use a date prior to the fiscal year
you enter here, when you enter beginning balances. Also, when you enter
GL beginning balances, you must enter all four digits for the year, such as
01/01/1997.
Here the decision is to choose the right starting date for converting to
Peachtree accounting. It must be a date for which you know all account
balances, customer balances, and vendor balances etc. If possible, the
starting date should be the end of the previous fiscal year. If you want
reports comparing this year to last year, the starting date could be the end of
the previous year. You can easily enter balances from last year at any time.
One special feature of Peachtree accounting is that you can have two rears
open at once (up to 26 periods). That means you can keep last year's records
accessible. It also givens you al lot of flexibility as the when you convert.
For example, you can set the first accounting period to the first period of
your fiscal year.
Once you have entered all the necessary information in these areas, you will reach the end of part
one. You new have a choice of three options: Continue Create and Go Back. Continue: Select
continue to move into part two of new company setup.
Create: Select create to create your new company in Peachtree accounting. New company setup
will close and Peachtree accounting will reopen, displaying your newly
created company.
WARNNING: Once you create the company, you cannot change your accounting method
(cash or accrual) or you accounting periods. Make sure you have these set
correctly before you create your new company.
Go Back: Select Go Back to return to part one, and change any of the information you
have already entered. Before you set up the information in part Two, you
may want to plan how you will set up your account types in the general
ledger, whether you will use masking and review or change global options.
These options or described in the Optional information on part Two section.
ENTERING NEW COMPANY SETUP: PART TWO
Part-Two: allows you to enter common information that will help you use Peachtree accounting
in the most efficient manner. Many of your part two settings are determined
from the information you provided in part one. However since every
company's needs differ, Peachtree Accounting lets you change the stings, as
you feel necessary.

The following areas of information may be set up in part two of New company Setup:
 Customer Defaults: Select your default payment terms, account aging, finance
charges, and custom fields for your customers.
 Statements/invoices: Choose your default print options and dunning messages
for your customer statements and invoices
 Vendor Defaults: Select your default payment terms, account aging and
custom fields for your vendors
 Inventory: Select your default G/L Link accounts, Shipping methods, tax
types, and custom fields
 Payroll: Select your payroll defaults such as state unemployment tax rate any
local tax rates, G/L link accounts, and custom fields
 Jobs: Select default custom fields to be used when you create jobs.
Once you finish entering these defaults, New Company Setup is ready to create your company.
To change options before you create the company, select the Go Back button.
Optional Information on part Two
The sections that follow provide optional descriptive information on selecting options during part
Two of New Company setup. If you are familiar with these concepts, skip to the section on
entering Beginning Balances.
Account Types
Each account in your chart of accounts needs to be labeled and classified as a type. The type
codes available for general ledger accounts are:
Cash Accounts Receivable

Inventory Other Current Assets
Fixed Assets Accumulated Depreciation
Other Assets Accounting Payable
Other Current Liabilities Long Term Liabilities
Equity (doesn't close) Equity Retained Earnings
Equity (gets closed) Income
Cost of Sales Expenses
Type codes are important, because: They affect your Financial Statements, they control what
happens during fiscal year-end they can be used as selection criteria for some reports
When creating or customizing your financial statements, you can enter one or more Account
Types for one section of the statement. Then, no matter what order your chart of Accounts is in,
the program will organize reports based on their account types.
Necessary Accounts

Some accounts are used by the system in daily transactions. In all Tasks except the General
Journal, Peachtree Accounting performs some of the accounting distribution for you, based on
accounts you establish in the default information (accessed through the Maintain menu or the
setup checklist). The accounts required to use each feature of the program are listed below:
Accounts Receivable: Accounts Receivable (Accrual only)

Cash Received
Discounts Allowed
Sales Tax payable
Interest income (for Finance charges freight)
Accounts payable Accounts payable (Accrual only)
Cash Disbursed
Discounts Taken
Payroll Cash Account
Salaries and Wages
All Deductions (Payable)
All Allowances (Expenses)
General Ledger Retained Earnings Rounding Account (for customized
Financial statements)
Inventory Sales Revenue
Inventory
Cost of Goods Sold
Peachtree Accounting will create defaults for these accounts when you copy information from an
existing or sample company. Be sure to check the accuracy of the Default information accounts
before you begin entering transactions.
Remember that even though everything is integrated in Peachtree Accounting, you do not have
to set up everything at first. If you can, it would be best to get everything set up at once, and
these instructions assume that you do. However, if you want, you can set up just one or two
functions now and others later or never. Reconciling the General Ledger to the other functions is
easier if you start at the same time. But it is certainly still possible later through the Setup
checklist screen of the Maintain menu shown below:

Window 5
Deleting a Company
In some cases you may want to remove a company created in Peachtree Accounting, possibly to
start over in order to delete a company, you must exit Peachtree and delete the company data
folder using Windows File Manager or Windows Explorer. Important, you should make a
backup of the company’s data if there is any possibility you may need the information later. It is
also recommended that you back up data on your hard drive before beginning this procedure.
To Delete Company
1. Open Peachtree Accounting and the company you want to delete

2. From the Help Menu, select file statistics
3. Write down the company short name displayed in the title bar of the file statistics
window.
4. The title bar displays “Data file Statistics”for XXX is the short version of your company
name.
5. Exit Peachtree Accounting
6. Select start, programs, then Windows Explorer
7. Locate the PEACHW folder using one of the following methods:

8. Select the folder and directory where Peachtree Accounting is located. PEACHW is the
default directory name
9. Double-click the PEACHW folder to display subfolders. One of the subfolders should be
named the same as the short company name you wrote down earlier. This is your
company data.
10. Select the company folder that matches the company short name. This is your company
data
11. To remove the company data, press the delete key. Select yes to confirm that you want to
delete the folder contents.
Backing up Your Company
Backing up your company frequently is an important part of maintaining you Peachtree

Accounting System. Peachtree Accounting Provides a simple back up utility and allows you to
launch another backup program within Peachtree to perform a complete backup of the Peachtree
program and data files.
Backing up your company files can save you hours of time: Having frequent backups insured
you against the necessity of re entering your data. How often you back up and which method you
choose depends on how you use Peachtree Accounting.
Global Options
You can set certain defaults or preferences that affect all companies in the Peachtree Accounting
data path. You can change any of these options at any time by selecting the global option from
the maintain option menu then the following window will appear:

Window 6. Global Options dialog box
To change global options:

 From the options menu, select Global
 Under Accounting Tab, you have the following choices
Decimal Point Entry
This option is used to determine the way decimal points are inserted in Peachtree accounting you
have the choice of allowing the Peachtree accounting program to place a decimal point in figure
or to enter the decimal point you self.
 Automatic – select this option if you want Peachtree to insert the decimal point. It inserts
it before the last two digits of an entered number. For example, if you type 1 and press
enter, Peachtree will displays 0.01 in the field.
 Manual – select this option if you want to type the decimal point your self. For Example,
if you type 1 and pres enter, Peachtree will display 1.00 in the field.
Hide General Ledger Accounts
You can select not to display general ledger accounts in various task windows; making data entry
easier and faster. When selecting any of the hide general ledger accounts global options, the
respective task windows in those areas will not display general ledger accounts fields. These
transactions will automatically use the default general ledger accounts that you have set up. You
can hide general ledger accounts in the following task areas;
 Accounts receivable – selecting this option hides general ledger accounts in the quotes,
sales orders, sales invoicing, and receipts windows.
 Accounts payable- selecting this option hides general ledger accounts in the purchase
order, purchases / receives inventory, and payments windows.
 Payroll – selecting these options these options hide general ledger accounts in the payroll
entry window.
Activity 3.4
On computer
The purpose of this activity is to help the trainee how to create companies on computer using
Peachtree accounting.
Instruction: Based on the given information you are required to complete the establishment of
new companies.

1. Company Name and Address Information:
 Giving your own name and address create a company use the next data to
complete it.
2. Business Type:
 Select: Corporation
3. Chart of account:
 Select: Build your own chart of accounts
4. Method of accounting
 Select: Accrual
5. Posting method:
 Select: Real - time
6. Accounting period:
 No of periods_12
 First period data will be entered January 1, 2006
Remember: once you enter the accounting method, you can not change it. If you wish to do this
you must delete the company and re – enter it. To delete the company, you use the delete
company option of the file menu.
Chart of accounts
The general ledger is the backbone of any accounting system. All of the transaction you process
in your business eventually get posted or stored in the rest of accounts known as your general
ledger. This set of accounts is called the chart of accounts.
SELECTING ACCOUNT TYPES
Account types help group accounts together for financial statements. These include,
- Accounts payable - Expense

- Accounts Receivable - Fixed Assets
- Accumulated Depreciation - Income
- Cash - Inventory
- Cost of Sales - Long term Liabilities
- Equity-doesn't close (Corporation) - Other Assets
- Equity-gets closed (Proprietorship) - Other Current Assets
- Equity-Retained Earnings - Other Current Liabilities
Selected account types determine where the account appears on financial statements and how
their amounts are handled at fiscal year-end.
At the end of the fiscal year, the balance amounts on the Income, Cost of Sales, Expenses, and
Equity-gets-closed account types become zero. The Net Difference is added to the Retained
Earnings. You can only create one account using the Equity-Retained Earnings Account Type.

Entering Beginning Balances
ENTERING OR MODIFYING THE CHART OF ACCOUNTS
The chart of Accounts window is used

 To add new accounts
 To modify existing accounts
 To delete an existing account
 To make an account inactive
 To change the account type for an account
To enter or modify the chart of Accounts.
1. From the Maintain menu, select chart of Accounts

The information for the chart of accounts is divided into two folders:
2. Select the Account ID (Set a new account ID) from either folder and enter the
description. Account ID's should be established in a consistent and logical system
that everyone who uses Peachtree can easily understand. In setting up a
numbering system for your chart of accounts. You should be aware of the
following.
o Account ID can contain any printable character except *, +, and?
o Account ID can not contain leading or trailing space. Spaces in the
middle are allowed.
o Account ID are case-sensitive, e.g. CASH and Cash would be different
accounts
Two other important points about coding your accounts
o Account numbers are sorted alphabetically, in ASCH sort order. This

means that numbers come before letters, and numbers are looked at in
binary fashion. For example, the following numbers are in ASCH sort
order: 1, 100. 1000, 27. To reorder them in a decimal fashion
requires a four digit-coding scheme: 0001, 0027, 0100, and 1000.
o There can only be one account with an Account type of Retained
Earnings
3. Select the inactive account box if you don't want to use the account and make it
eligible for purging at the end of the year.
 HINT: You may find it easier to add all necessary accounts and then create one
cumulative beginning balance entry.
To enter beginning balances or prior period adjustments:
1. From the Maintain chart of Accounts screen, select the Beginning balance button. The select
period screen displays.

Window 7
2. Select the accounting period in which you want to enter or adjust balances, and click Ok.
The chart of Accounts prior period adjustment window displays.
3. Click or Tab to any of the white cells in the grid to change or add an amount. (The gray cells
are for viewing only).
Notice that the Trial balance keeps a running total of your entries. In addition totals for your
income and expenses are calculated.
For abnormal balances, enter a negative amount by typing a minus sign before the number. E.g.
For a negative balance in Accounts Receivable.
4. Select OK when you are finished.

If "Out of Balance" message is displayed, select cancel and check the balances you entered
again. After correcting, select OK again. Or, if still cannot find the error, you can proceed with
setting up your company by selecting OK, then later, if you find the cause of the out-of-balance
situation, you can go back and correct the situation.
5. Continue entering beginning balances

6. Select OK when you are through
Activty3.5 using computers
Instruction: Based on thegiven information you are required to enter chart of accounts and the
beginning balance for the company.

Account No. Account description Beginning Balance

Debit Credit
1000 Petty cash 1,500
1001 Cash in bank-saving 10,000
1002 Cash in bank-checking 50,000
1005 Account receivable 25,500
1004 Allowance for uncollectible
1005 Notes receivable 40,000
1006 Loan to employees 5,000
1007 Supplies 2,500
1008 Prepaid insurance 12,000
1009 Prepaid rent 6,500
1010 Inventory 60,000
1011 Equipment 120,000
1012 Accumulated depreciation Equipment 12,500
1013 Vehicles 45,000
1014 Accumulated depreciation Furniture 20,000
2000 Account payable 22,000
2001 Accrued payables 4,500
2002 Notes payable 75,000
2003 Employee income tax payable
2004 Mortgage notes payable 45,500
3000 Common stock 160,000
3001 Paid-in-capital in excess of par 8,000
3002 Retained earning 30,000
4000 Sates
4001 Sales allowance
4002 Miscellaneous revenue
5000 Shipping expenses
5001 Salaries expenses
5002 Repair & maintenance expense
5003 Supplies expense
5004 Income tax expense
5005 Interest expense
5006 Depreciation expense
5007 Rent expense
5008 Insurance expense
5009 Miscellaneous expense
5010 Amortization expense
Grand Total 378,000 378,000

Note: Remember while maintaining chat of accounts use the appropriate account types other
wise error will be occurred in recording and posting transaction. This error will lead to produce
erroneous reports to the users.
Variables related to general and budget information
Entering budget information
From the budget folder you can assign budget birr among to each account, for each fiscal period.
For example, let’s say you have chosen account No. 5001 as the account number for salaries
expenses.
Steps to enter budget information
From the budgets folder, you can assign budgets for each account, for each fiscal period. To
assign budgets.
1. From the maintain chart accounts window, select the budgets folder
2. Enter budget amounts for this year and next.
You can use one of the two methods-you can enter individual amounts for each period or
allocate a total amount and have it distributed to all periods.
3. You can copy the total of all accounting periods' amounts from this year to the same
accounting periods for next year by selecting the amounts you want to copy and selecting
the copy icon.
4. When you have entered your budget information, select Save.

Window 8: Budget setup folders
Activity 3.6: Hands on computer
Instruction: Based on the given information you are required to maintain budget information for
the following selected accounts using the company you established on task 4
1. Account No. 1008 Annual budget birr 15,000

Account payable is an obligation of the organization to pay specific sum of cash to vendors on
time or on demand. Peachtree accounting organizes and monitors account payable, the money
you pay to suppliers or vendors. The money that you pay to vendors is tracked in account
payable. You can setup vendors, payment terms, aging guidelines, and more. Creating a list of
these items makes entering purchase and payment simple and fast.
Account payable variables
Below are clearly discussed the account payable variables so that the trainee can easily
understand how to maintain payables by considering the policy of the company.
Setting up vendor Default

Default information is information you enter once, and then automatically displays in windows,
or is automatically used by the system. On the vendor defaults window, you define the default
vendor payment terms, account aging and custom fields available when you add vendors using
the maintain vendors window. Setting up the default information so it is accurate for the majority
of your vendor saves you time when you enter your vendors. You may edit these defaults for
each vendor.
Entering vendor Maintenance information
To open the maintain vendor window, do the following:
 From the maintain menu, select vendors.

 The maintain vendor window displayed (see figure 3. 12 below)
 From this window you can add a new vendor, change existing vendor information, or
erase a vendor. The maintain vendor screen is very similar to the maintain customer
screen.

Window 9: vendor maintenance screen
Header information
The header information contains the vendor ID and vendor name
 Enter the vendor ID- it can be up to 20 alphanumeric characters
 Enter the vendor Name- you can enter up to 30 characters.
The General Tab

This includes the vendor’s address, e-mail address, telephone, fax numbers and contact person.
 Enter address information

 Enter vendor type to group similar vendor together
 Enter telephone and fax numbers
Purchase Defaults
 Select the purchase defaults tab of the maintain vendors window

 Enter or select the header information
 Select or enter a purchase account. This field sets the default G/L (general account)
Purchase account that displays when you enter a purchase transaction form this vendor.
Note: when you are finished filling in the window, select the save icon and close the
Window

3.7.1.3 Entering Vendor Beginning Balance
To enter vendor beginning balances:

1. Select the beginning balance arrow button on the general tab of the maintain vendors
window.
The vendor beginning balances window displays;
2. Highlight newly entered vendor from the list box.
3. Select the beginning balance button from the General Tab. This allows you to enter
beginning inventories or invoices for this vendor.
4. On the invoices tab, fill the invoice number, the invoice date, amount, and appropriate
A/p account.
5. The vendor balances tab allows you to select other vendors and enter beginning balances
for them first, select the vendor’s balances tab. Then double-click the vendor name or
highlight the name ad select the invoices for tab to return to the first tab and enter
outstanding invoices.
6. When you are setting up your company, it is important to remember that the total of the
beginning balances entered her should equal the total amount you entered in your general
ledger beginning balances for all account payable account types.
7. When you are finished entering the invoices or invoices, select the save icon.
8. Select the close icon to return to the vendor’s window.
Note: once you enter the vendor, you can enter another vendor, or end your session with
Vender by selecting the close icon.
collection letters, as well as produce a wide variety if reports on your accounts receivable
information.
Accounts receivable provides four different, flexible tasks. All of the task work together and you
can use the tasks that best suit your business. These tasks are:
 Quotes: You can send a customer a quote, giving the price of items you sell, service
you provide, freight charges, sales taxes, etc. Once your customer accepts the quote,
you can convert it to a sales order or to an invoice.
 Sales Orders: This task allows you to track customer backorders for items you do not
have in stock and invoice for items you do have in stock. You can invoice a customer
multiple times on the same sales order. You can view reports on items you have
backordered for a customer.
 Sales/Invoicing: This task allows you to enter and print invoices for your customer,
and ship and invoice for items entered on sales orders. Even if you are a cash basis
company you can use invoicing to track your sales and gain a better picture of your
outstanding balances, although the amounts entered in this task do not affect your
general ledger.
 Receipts: This is the central accounts receivable task, where you enter the money you
receive from your customers. If you invoice customers, you can apply customer
receipts directly to particular invoices. If you generally make cash sales, you can also
enter these directly into the receipts task.

Account receivable variables
All the necessary points regarding account receivable discussed below step by step so the trainee
required to follow these steps to complete working with account receivable.
3.8.1.1. Setting up customer default information

Default information is information that automatically displays in windows, or is automatically
used by the system. Through the customer defaults window, you can establish parameters that
will be used when calculating and aging statements, and computing finance charges.
To setup customer default information

From the maintain menu, select default information, and then select customers from the
submenu. The customer defaults window displays (see figure 3:13). The default information for
your customers is divided into the following TABS;
A. Default Customer Payment

Terms Standard Terms
You may enter a set of standard terms to be sued by customers. If the standard box is checked for
a customer in the customers selection of the maintain menu, that customers uses these terms.
These are the fields that define standard terms:
 C.O.D (cash on delivery), prepaid, Due in number of days, due on day of month, due at
end of month: selects one of these to tell you the type of payment your customers make
 Net due in – days: enter the number of days past the invoice date before the invoice
becomes due.
 Discount in –days: enter the number of days past the invoice date beyond which you
will not allow customers to get discounts
 Discount %: enter the percent of the total invoice amount that you will allow to
customers as a discount, if payment is made within the discount days range. Enter
fractions as decimals; for example, tow-end-one-half percent should be entered as 2.5.
 credit limit: enter the total amount of credit you allow your customers.
 CL(general ledger) sales account: enter or select the account ID you want to use as the
default sales (income) account when entering customers. Use the lookup button on the
side of the entry box or type a “?” to see a list of your choices. You may add a new
account number by typing a “+”, or by double clicking. You must enter an account
number here.
 Discount CL Account: enter the number of the account you want to use for discounts.
Use the lookup button on the side of the entry box or type a “?” to see a list of your
choices. You may add a new account number by typing a “+” or by double clicking you
must enter an account number here.
B. Aging Information
The age invoices by fields are used in conjunction with the aging categories. You may setup
a customer from the maintain menu, or you may set up customers using the customer fields
on the jobs (maintain menu), sales invoicing, and receipts (Task Menu) Windows.

st
For example, entering 30 for the 1 column would display all invoices that are over due
nd
between 0-30 days. Entering 60 for the 2 column would display all invoices that are over
th
due between 61-90 days. The 4 column will show all invoices that are more than 90 days
overdue.
Window 10: customer default screen
Note: click the ok button and close the window after finishing the items.
Setting up Default Sales Taxes
The followings are sales tax default information used while setting up default sales taxes.
These are:
 Sales tax codes: the over all rates applied to taxable items on invoices to
customers, which is composed of rates entered as sales tax authorities.
 Sales Tax Authorities: governments or other taxing agencies, and their tax rates,
which are used to assemble the sales tax codes.
Note: when you enter an invoice to a customer, the sales tax code is used to calculate sales tax. A
sale tax authority also needs to be associated with a vendor, in order for you to run the sales tax
report.
Entering sales tax authorities

You must first enter a vendor, and then you assign this vendor and sales tax payable general
ledger account to the sales tax authority.

Steps to Create Sales Tax Authority

1. Add the agency to whom you pay taxes as a vendor, for example Federal Inland Revenue
Authority
2. From the maintain menu, select sales taxes, and then select sales tax Authority from the
sub menu. The maintain Sales Tax Authorities window displays
Window 11: maintain sales Tax Authority
3. Enter an identifying code (ID)

ID-Enter up to eight alphanumeric characters for the tax Authority ID.
You may want to use descriptive Ids such as Inland or Region.
4.Description- you can enter a description of up to 30 characters;
for example, federal Inland Revenue Authority.
5. Tax- Rate this is the tax percent. For example, entering 12 will give you a tax
rate of 12 percent. If you enter 12 without the decimal point, the percent will be 12
6. Select the vendor who is the taking authority governing this tax, for example,
federal Inland Revenue authority. This is the vendor you entered in step 1.
7. Enter the sales tax payable G/L account to be updated by sales entered ad posted
with a tax code, which has this authority as a component.
8. When you have completed a taxing authority, select save to save your entries then
select close to close the window.
Entering sales tax codes
Make sure you have already set up your sales tax authority before you begin setting up sales tax
codes. You will also want to have a vendor setup for the state or other authorities you will send
your tax check to before you continue.
Steps to Create Sales Tax Codes

1. From the maintain menu, select sales taxes, then select sales tax codes from the submenu
2. Select an existing sales tax code or type anew one, using to eight alphanumeric
characters.
3. Enter a description of this sales tax code
4. Select save to keep your entries, and then select close to exists window.
3.8.1.3 Setting up Customer Maintenance Information

From the maintain menu, select customers /prospects and then the maintain customers window
displayed :
Window 12: Maintain customers screen

Maintain-customer window contains the following tabs:
Header information
The header information contains the customers ID and customer Name:
 Enter the customer ID: It can be up to 20 alphanumeric characters
 Enter the customer Name: you can enter up to 30 characters.
The General Tab

Customer address includes the customer’s address, e-mail address, telephone and faxes numbers
and contract person.
 You can enter a total of ten addresses
 Select the customer’s default sales tax code
 Enter a customer type to group similar customers together
The Sales Default Tab

When you select the sales defaults tab, the sales defaults information displays. The information
you enter here affects how the sales transactions default for the customer. To enter sales default
tax:
1. Select the sales default tab, if it is not active
2. Enter the default GL sales account that displays in the sales transaction windows
when entering these records for the customer.
3. The default payment terms that displays are setup as part of the customers default
information. For example, for this customer you can select 2/10, N/30 which means
if the customer settle its obligation within 10 days it will be entitled to get a 2%
discount other wise full payment need to be paid within 30 days.
4. When you are finished filling in the window, select the save icon.
3.8.1.4 Entering a customer’s beginning balance
Once you save the customer record, but before you post any transactions, you can enter
beginning balance for the customer. To enter customer beginning balance:
1) Highlight the newly entered customer from the list box
2) Select the beginning balance from the general tab. This allows you to enter the
beginning invoice or invoices for this customer. The customer beginning balances
window displayed :
Window 13: customer Beginning Balance
3) On the invoice for tab, fill in the invoice number, the invoice date, amount, and the
appropriate A/B (Account receivable) account.
 The customer balance tab allows you to select other customers ad enter
beginning balances for them. First, select the customer balances tab. Then
double-click the customer name or highlight the name and select the
invoices for tab to return to the first tab and enter outstanding invoices.
 When you are setting up your company, it is important to remember that
the total of the beginning balances entered here should equal the total

amount you entered in your G/L beginning balances for al account

receivable account types.
4) When you are finished entering that invoice or invoices, select the save icon.
5) Select the close icon to return to the customers’ window.
Note: Once you enter the customer, you can enter another customer, or end your session with
customers by selecting the close icon.
Payroll variables
The following payroll variables need to be entered in order to work with the payroll facility in
Peachtree complete accounting. PAYROLL
 Default Information-the area where you set up company defaults for all your employees
including G/L accounts, pay levels custom fields, and payroll fields.
 Employee Information- the area where you set up employee information such as name,
address, social security number, tax filing status, and pay levels; also indicate if he or she
is using company defaults for payroll fields.
 Payroll Journal Entries- the area where you actually process payroll checks (known in
Peachtree as Payroll Entry).
 Payroll Reports- the area that takes your Default and Employee Information along with
payroll journal entries to produce reports which monitor the payroll process. These
reports include Period and Quarterly Earnings.
NOTE Most of the Payroll entries and information discussed in this chapter may not be directly
used in the Ethiopian Payroll System. Users of this program can use the Options for alternative
applications (e.g. using the Gross Salary field as a Basic Salary) or they can avoid that
information that is not appropriate for their use (E.g. Unemployment taxes of State, Federal and
Local Governments).
SETTING UP PAYROLL
The following lists the basic steps you go through to set up payroll n Peachtree Accounting.
Step 1- Entering Initial Payroll Field Setup

Step 2- Entering Employee Default Information
Step 3- Entering Employee Information
BEGINNING PAYROLL SETUP
Peachtree Accounting initiates the Payroll Setup process by asking a few basic questions and
what certain company defaults will be. Then it automatically creates the standard payroll fields
for you and associates them with the applicable payroll tax tables.
You can begin payroll setup in one of two ways:
 New Company Setup-During part 2 you have the option of entering employee Defaults.

 Initial Payroll Field Setup-If you skipped Employee Default in part 2 of New company
Setup, you can enter employee default information using the Initial Payroll field setup
window of the Default Information for Employees from the Maintain menu.
Both methods accomplish essentially the same purpose. New company setup automates the
payroll setup and walks you through entering Pay Levels as well as Custom fields. However,
often when you are first setting up a company, you may not have all the information available to
set up payroll. If you skip part 2-Entering Employee Defaults, you have a second opportunity to
set up payroll through Default Information for Employees from the Maintain menu.
Payroll is unique in that, the first time you access employee Default Information-either from the
Setup Checklist or from the Maintain menu-Initial Payroll Field Setup window displays. This
window will not display again after you enter and save the information from either the Setup
checklist or Maintain employee Default Information. It will also not display if, during new
company setup, you choose to copy defaults from an existing company or sample company, and
then you entered the payroll default information in Part Two.
What does Peachtree Accounting set initially up?
When you answer the prompts in the Initial Payroll field Setup window, or complete the payroll
defaults during new company setup, Peachtree Accounting will create for you most of the
common payroll fields used in calculating payroll deductions and taxes.
Peachtree Accounting set up

 State and locality defaults (if applicable)
 Common Federal and State payroll fields for employees and company paid taxes
 G/L account defaults for payroll fields
 Salary and Hourly Pay Level defaults
 Employee Custom Fields (set up from New company Setup only)
What Specific Payroll Fields are initially Set Up?
Although most of the concepts are not applicable in the Ethiopian Payroll System, during the
Initial Payroll Field Setup, Peachtree Accounting can set up (depending on your responses) the
following fields:
Employee Fields:
- Gross - 40IK
- Federal Income - State
- Social Security - SDI (State Disability)
- Medicare - SUI (State Unemployment)
- Tips - SETT (State Employee Training)
- Meals - Local Income Tax (Employee)

Employer (Company) Fields:
- Social Security
- Medicare
- FUTA (Federal Unemployment Tax)
- SUI (State Unemployment Insurance)
- Local Income Tax (Employer)
Entering Initial Payroll Fields
To enter initial payroll fields, you can complete all or part of the following steps which most
suits your employee data:
1. From the Maintain menu, select Default Information, then select Employees from the
submenu OR from the setup checklist, select Enter Employee Default Settings.
If you entered Employee Defaults in Part Two of New Company Setup, copied Employee
defaults from an existing company, or have previously entered Initial Payroll Field
information, the Employee Default Information window will display instead of the Initial
Payroll Field Setup window.
2. Enter or select a state code. (In the Ethiopian case, please leave this blank and select Cancel.)
3. Enter a locality and locality tax rate if the fields are available and applicable.
4. Enter the un employment percent the state requires your company to pay.
5. Select Yes or No to create payroll fields for a 401K plan and Tips and Meals.
6. Enter or select the expense account to use for the Gross Pay field, and the liability account to
use for most employer taxes and employee taxes withheld.
7. Enter the expense account to use for most employer taxes.
8. Select OK when you have entered all this information correctly.
If you wanted to start over, you would have to delete all payroll fields. You should not do
this if you have already processed some payroll checks.
ENTERING EMPLOYEE DEFAULT INFORMATION
Once Peachtree creates the initial payroll fields, you can modify the defaults to suit your
company needs. You are also given the opportunity to enter default Pay levels for hourly and
salary employees as well as custom fields.
The information on the Employee Defaults screen is displayed as four tabbed folders- General,
Pay Levels, Employee Fields, and Employer Fields – with a label on each tab. The fields are
visible for one tab at a time, but you can view other fields by selecting a different tab.
To get to these tabbed folders, do the following:
 From the Maintain menu, select Default Information then Employee from the submenu. The
following Employee Defaults window displays:

Window 14
Entering General Information
1. Select the General tab on the Employee Defaults window.

2. Select or enter state and locality codes. (If applicable).
3. Check the Enabled box, and then enter the field labels for your custom fields; such as
Position Title, Next Raise Date, Emergency Contact, Second Phone Number, Spouse’s
Name, and Birthday. If a field is not enabled, the information is still there.
4. Assign payroll fields for W-2s (if applicable), Employee Paid Taxes, and Employer Paid
Taxes by selecting the arrow button next to each item.
Payroll Fields are used to calculate and post employee deductions and allowances and
employer taxes. You can also set up memo fields, where amounts are tracked for
reporting and tax calculations, but no entry is made to the general ledger.
5. Select OK to save your entries and close the window.
Assigning Payroll Fields for Employee Paid Taxes
1. Select the Employee Paid Taxes button on the General tab of the Employee Defaults
window.
2. Enter or select payroll fields from the list for each box you want to
use. Sometimes fields must be assigned more than once.
3. When all entries have been made, select OK to save any changes and close the window or
precede t complete information on the other tabs.

Assigning Payroll Fields for Employer Paid Taxes
1. Select the Employer Paid Taxes button on the General tab of the Employee Defaults
window.
2. Enter or select payroll fields from the list for each box you want to use.
3. When all entries have been made, select Ok to save any changes and close the window.
Entering Pay Levels Information
The second tab of the Employee Defaults window is for levels of employee pay; both hourly and
salary levels are available here. This window allows you to set up a maximum of 10 different
descriptions for hourly pay types and 10 for salary. This means you can track overtime, special
bonuses, or any other type of pay.
1. Select the pay Levels tab of the Employees Defaults window.

2. If you have employees who are paid by the hour, enter the description(s) and select a
general ledger expense account to use when disbursing paychecks.
OR
If you have employees that are paid a salary, enter the descriptions(s) and select a general
ledger account to use when disbursing paychecks.
Notice that if you set up payroll Defaults in New Company Setup, these fields will
already be filled in.
3. When all entries have been made, go on to the next tab or select OK to save any changes
and close the window.
Entering Employee Fields Information
These payroll fields serve three basic functions:

 Payroll deductions and allowances, that combines with the gross to compute net pay.
 Mamboed amounts, such as Vacation hours, Tips, and Meals, that are tracked for
reporting and tax calculations, but not posted to the general ledger.
 Tax amounts, tracked for computing the employee’s W-2 amounts. (Basically, the first
two combined.)
However, you can use these fields to hold any amount, dollars or otherwise, that should be
accumulated and updated when you post payroll disbursements. (For example, vacation hours.)
You can change a payroll field at the employee level if necessary.
Peachtree Accounting automatically sets up some employee payroll fields when you complete
entering payroll Defaults during new company setup or when you complete the Initial Payroll
setup screen. You may want to ensure accuracy before you continue. For example, by default,
Peachtree Accounting Sets 401K deductions as not calculated; you would have to enter the
amount during payroll processing. However, you might want to have the program calculate 401K
deductions, by setting up a “tax table.”
Follow these steps for each line you want to use on the Employee Defaults window

1. Select the Employee Fields tab of the Employee Defaults window.

2. Enter a new deduction description, or edit the existing one.
Besides the Gross payroll field, you can set up a maximum of 29 otter payroll fields. Just
place your cursor in a blank line to enter a new field, or on an existing item to edit it.,
3. Select or enter the account number to which the amounts entered in the payroll field
should be posted.
If the Memo box is checked, you cannot access this field since memo amounts re not
posted to the general ledger. This is normally a liability account for all taxes withheld.
4. Check the Calc box if you want Peachtree Accounting to automatically calculate the field
amount when computing paychecks. This option applies mainly to Payroll taxes, for
which you (or the program) must have set up a tax table. If this box is not checked, you
have to compute and enter any amounts that go into this field when processing payroll.
5. Select or enter a calculation Name if you checked the Calc box.
You must enter the name of a tax table to use when calculating this field during payroll
entry and while printing payroll tax forms. Peachtree Accounting comes with the most
common tax table that are applicable for the US. In addition, you can create a table
through the Maintain Payroll Tax Tables option of the File menu.
6. Enter an amount (positive numbers are earnings and negative numbers are deductions) if
you want to enter a flat amount instead of a calculation.
7. Check the Memo box if this is an amount that should not be posted to your company’s
books. For example, amounts that do not normally affect your books, such as restaurant
tips; and non-dollar amounts such as vacation hours earned must be shown as memo
fields.
8. Check the Run box if you want Peachtree Accounting to keep a running total of this field,
and not to reset amounts to Zero when you close the payroll year. For example, if you set
up a field to track vacation hours, you might not want zero these at the end of the year.
9. Select the Adjust button if you want to edit how the Adjusted Gross is calculated for this
field.
10. When all entries have been made, go on to the next tab or select OK to save any changes
and close the window.
The Adjust Button
On the Employee Fields tab of the Employee Defaults window, the last column has an Adjust
button. This button opens a window so you can enter an adjusted gross amount for calculations
made by the system.
To adjust the gross amount used for a calculation follow these steps:
1. Select the Adjust button and check (x) the fields to add to the gross.
2. Select Ok When you are finished selecting fields.
5.1.2.4. Entering Employers Fields information
Follow these steps for each line you want to use on the Employee Defaults window
1. Select the Employer Fields tab of the Employee Defaults window.

2. Enter a new deduction description, or edit an existing one to be used to identify the field
during tax calculations and on reports.
3. Select or enter the general ledger liability and expense accounts to be updated.
4. Check the Calc box if you want Peachtree Accounting to calculate the employer tax. Ten
select or enter the Calculation Name you want the system to use for the calculation.
5. To set the Adjusted Gross for this field, select the Adjust button
6. When all entries have been made, select OK to save any changes and close the window.
ENTERING EMPLOYEE/SALES REP MAINTENACE INFORMATION
The information in Employee/Sales Rep Maintenance includes information you store about your
employees or sales representative, or employees who are sales representatives. The information
is displayed as five tabbed folder with a label on each tab-General, Custom Fields, Pay Info,
Employee fields and Employer Fields.
To got to these tabbed folders,
 From the Maintain menu, select Employee/Sales Reps

The following Employee/Sales Rep window displays:
Window 15
Header Information

On each tabbed folder there is information that is the same. This is called header information and
includes Employee ID., Name, Employee/Sales Rep/Both, and Inactive.
 Employee ID- this code can be up to 20 characters long or you can select an existing
employee ID from the list.
 Name-The employee name can be up to 30 characters long. If you selected an existing
employee, the information is automatically filled in here.
 Employee – This option turns on all employee specific fields.
 Sales Rep- When this option is selected, the employee will be included in all sales
representative reports. This turns off tax filing pay rate, and deduction information.
 Both – This employee is also a sales representative.
 Inactive – If you check this box, the employee is marked as inactive, to be deleted at
year-end processing. If you try to enter a transaction with this employee, you will be
warned of the inactive status.
General
1. Select the General tab of the Maintain Employees/Sales Reps window.

2. Enter or select the header information.
3. Enter the address information.
4. Enter the employee’s Social Security # (if applicable), Type (eg, Administrative,
Production, Contract, etc.) and pone number.
5. Enter the appropriate hire date, and other applicable dates.
6. Select or change the Tax Information if this is an employee or both (not just a sales Rep).
7. Enter or change the beginning balance, if necessary.
8. Select Save when you are finished entering information.
Custom Fields
Peachtree Accounting allows you to customize information with five fields. You can use these
five fields to sort and group information on reports. .
1. Select the Custom Fields tab of the Maintain Employees/Sales Reps window.
3. Enter information in the custom fields that you may have set up in the default
information. For example, if the custom field is “Birthday”, enter the employee’s
birthday.
Pay Info
The Pay Info tab of the Maintain Employees/Sales Reps window is for information about how
you pay employees. The default information has already been set up, and you make choices for
individual employees here.
1. Select the Pay Info tab of the Maintain Employees/Sales Reps window.

3. Select the employee type (Hourly or monthly) and frequency of pay (weekly, bi-weekly,
monthly, semi-monthly, or annually).
4. Uncheck the Std box if you do not want to use the standard G/L Account for this
employee for each description. Then change the G/L Account.
5. Enter the hourly or salary rate for each description.
6. Select Save when you are finished entering information.
Employee Fields
You can enter specific information for employees using this tab of the Maintain Employees/Sales
Reps window. To change an employee’s deductions so they are different than the default
information that was set up for all employees, do the following:
1. Select the Employee fields tab of the Maintain Employees/Sales Reps window
3. Uncheck the STD box for the line you want change.
4. Enter or select a new G/L account to use, if necessary.
5. Uncheck the Calc box if you do not want to use an existing calculation and enter an
amount to use. Or check the Calc box and select a calculation to use.
When both the STD and Cale boxes are unchecked, you can enter an amount to use for
the deduction. When the STD box is unchecked and the Calc box is checked, the Adjust
button becomes available for use.
6. To set the Adjusted Gross for this field, select the Adjust button.
7. When all entries have been made, select save to save any changes and close the window.
Employer Fields
This tab is for information on employer (company) taxes. To change this information from what
was entered as defaults, do the following:
1. Select the Employer Fields tab of the Maintain Employees/Sales Reps window.
3. Uncheck the Std box for the line you want to change
4. Enter or select a new G/L account to use, if necessary.
5. Uncheck the Calc box if you do not want to use an existing calculation, or check the Calc
box and select a calculation to use.
6. To set the Adjusted Gross for this field, select the Adjust button.
7. When all entries have been made, select Save to save any changes and close the window.
Reviewing Employees/Sales Reps Information
To review general information:
 From the Maintain menu, select Employee/Sales Rep.

To review payment history:
1. From the Reports menu, select Payroll Reports.
2. Select Current Period Earnings Report, Quarterly Earnings Report, or Yearly Earnings
Report, depending on the period of time you want to review.
3. Select screen as the Print Destination, then select LK to view the report on the screen.
Erasing Employee Information
The Erase icon deletes the entire record for the employee. You cannot erase a record with any
payroll journal entries. You cannot do this until after closing the payroll year, if a W-2 form is
required for this employee. Use the Inactive Employee box instead.
1. Select the record to erase by highlighting the Employee ID in the list box, or by typing
the ID and pressing ENTER.
2. Select the Erase icon.
3. To delete this employee, select yes.
PAYROLL TAX TABLES
Through the Payroll Tax Table Entry window, you can enter or edit tax table information.
Peachtree Accounting comes with federal, state and some local tax tables for the United States.
In addition, updates are available through the Peachtree Accounting Tax Service; they can be
loaded through the File menu.
Many of the processes that Peachtree Accounting goes through to calculate payroll taxes depend
not only on what is entered in the Payroll Tax Tables, but also on what is entered in the
Employee Default Information. Many pieces of information needed to calculate Payroll Taxes
come from the individual Employee records of the Maintain menu.
Tax tables are used in conjunction with Payroll Field Definitions, as the Calculation Name.
Beyond tax calculations, payroll “tax tables” can be used for other purposes. Payroll tax tables
are used as Payroll Field Definition calculations. Because payroll fields can be used to
accumulate and amount, you could create calculations for vacation hours, or anything else you
need to track for employees. You can also set up tax tables to calculate employer-related
amounts.
Global tax tables are used for federal, state, and local taxes of the United States. These are
maintained by Peachtree Accounting and available for all companies.
Company tax tables are the special tables you create for local taxes or for other calculations.
Company tax tables are company data specific. They are not available for other companies to
use. They are grouped separately to allow w you to update tax tables globally, with our the
possibility of overwriting the company tax tables you have created.
In some cases, you may have different tax tables with the same name in both Global and
Company. In this case the computer will use the Company tax table. Be careful to only create
new tax tables through the Edit Company option,. Global tax tables will be overwritten cash time
you reinstall Peachtree Accounting (including upgrades) or load tax updates.

CREATING OR EDITING TAX TABLES
The Edit Global and Edit Company tax table windows are identical. Because you should only
create tax tables through the Edit Company option, this chapter explains how to access Edit
Company, and shows the Edit Company screen. In the rare case where you must change Global,
the field descriptions are the same.
Opening the Payroll Tax Tables Window
1. From the File menu, select Payroll Tax Tables, and then Edit Company from the
submenu. If the table you wish to modify is already in the tax Tables, scroll through the
list box at the top of the screen and select the entry you wish to modify. If you wish to
enter a new tax table, enter an ID code which is not already in the Tax Tables and press
ENTER.
2. Enter or select a Tax Table ID and name.
The Name of the Payroll Tax Table is very important, because it is how the computer
identifies which tax table to use for a particular payroll field. It must be entered according
to strict rules. The name consists of two parts, separated by a single space. The first part
is the ‘Calculation Name’ that is entered in the Employee Fields folder on the Employee
Defaults window. The second part of the name is the ‘Payroll Year’ which is the last two
digits of the calendar year to which this Tax Table applies.
During Payroll Entry (or any other time the computer must calculate payroll taxes), the
computer looks for the name associated with a payroll field, adds a space and the last two
digits of the current calendar year to it, and then searches for that combined name in the
Payroll Tax Tables.
For employer-related tax tables, enter the suffix ER after the ID and before the date. For
example, for the employer portion of the Provident Fund, 1998 enter Provident Fund 96.
3. Select a filling status.
This is use to select which Filing Status this calculation refers to. If this calculation is to
be used for all employees, regardless of Filing Status, select All Statuses from the list.
4. Check the Appears on Payroll Tax Report Menus box if you want this calculation to
appear on the Payroll Tax Report menu or to have the payroll Field which uses this
calculation appear on the Exception Report menu.
If the Appears on Payroll Tax Report Menus box is checked, the TAXABLE_GROSS
variable must appear in the tax table formula on the left side of an equal sign (=) in at
least one Equation, as this value is needed when printing Payroll Tax Reports and
Exception Reports.
5. Select the government authority that is collecting this tax.
This is the government authority that is collecting this tax, and determines which Filing
Status to look at.
6. Select Deduction, Addition, or Exception as the Type to tell Peachtree Accounting if it
should add this tax to the paycheck, deduct it, or if it is an exception (for example,
vacation, sick time, etc).

If an amount is set as a deduction and returns a positive number, then its value is set to
Zero. If an amount is set as an addition and returns a negative number, then its amount is
set to zero.
If however, you want to be able to use positive and negative numbers in the payroll calculation,
then select Exception. This should only be used for
Maintaining payroll formula
Peachtree accounting allows the user to customize the payroll table and formula. The following
steps let you maintain tax table and formula to calculate employee’s income tax. The following
table (schedule) derived from the Ethiopian payroll table that is formulated in the year 2002 on
proclamation No 286/ 1994 Ec.
Gross more With hold Plus %

than
150.00 0.00 10%
650.00 50.00 15%
1400.00 162.50 20%
2350.00 302.50 25%
3,550.00 602.50 30%
5,000.00 1,087.50 35%
Ethiopian payroll tax table

steps
Step1. Move your mouse pointer on the file menu and click on it, then select payroll tax
tables, and from this submenu select Edit Company.
Step 2. From the maintain company payroll tax tables, click on table icon to maintain the
above table information for your organization.
Step 3: Enter Tax ID: If you plan to enter a new tax table, enter an ID that is not already
in the tax table list.
Step 4: Enter Tax Name: the name you choose for your tax table is important because it
allows Peachtree accounting to identify which payroll tax table to use a
particular field. The name has two separated by a single space.
Step 5: Calculate Name: This is the name that you enter as the calculation name.
Step 6: Filing status: If this calculation is to be used for all employees, regardless of
filling status, select ”All filing statuses” from the drop-down list. If you choose
a status other than this, you can create multiple tax tables with the same name,
one for each possible filing status.
Step 7: type: Select the type from the option given
Deduction: Select this option to subtract the calculated amount from the gross.
Addition: Select this option to add the calculated amount to the gross.
Exception: Select this option for a positive or negative number to be allowed in
payroll calculations. Use exception for a vacation or sick time field to allow the
calculation of a deduction to be positive, or the calculation of an addition to be
negative.

Step 8: Government:
Federal: this identified the government type for the tax table. It means that the
tax table will be calculated based on the employee’s federal, state, or local tax
information set up in the maintain employees/ sales reps window.
Step 9: Enter the formula: The formula box contains the equations you used to actually
calculate taxes. In most cases, you will not have to do anything here; Peachtree
Accounting supplies the equations for most types of taxes. The following payroll
formula qualities for an Ethiopian payroll tax table.
TAXABLE – GROSS = ANSWER; ANSWER= -TABLE (ADJUSTED-GROSS)
Note: the formula need to be entered as given above other wise it cause an error in calculating
the Ethiopian payroll table.
Maintaining Inventory
Inventory variables
Introduction
Inventories are a material, which held by business organization for reselling purpose.
Merchandise business purchase inventory and sale it to their customer in order to make money
on it.
Peachtree accounting tracks the inventory items you buy and sell, and automatically updates the
quantities after each posted transactions. It also allows you to store items you don’t stock, but
that you enter on invoices. This makes entering invoices faster for you Peachtree Accounting
support three types of inventory methods. These are
 FIFO (First-in –First-out) This method assumes a flow of costs based on the assumption
that the oldest inventory on hand are sold first. This assumption about cost flow
generally conforms to reality; management usually finds it desirable to keep the oldest
goods moving out to customers in order to keep fresh or new goods on hand. The method
is systematic and is easy to apply; it adheres to the cost principles; and the cost assigned
to inventories is likely to be in close harmony with the current prices being paid for
inventory replacement.
 LIFO (Last-in –First-out) this method assumes a flow of inventory costs based on the
assumption that the most recently, Purchased goods are sold first, because current costs
are incurred to make current sales and to maintain adequate inventories on hand, under
this view, the latest costs are most closely associated with current revenue; this means
the matching principle of income measurement is carried out.
 Weighted-Average Method: The weighted-average method of inventory valuation is
based on the assumptions that all inventories are mixed and that no particular batch of
inventory is retained in the inventories, thus, the inventories are valued on the basis of
average prices paid for the goods, weighted accounting to the quantity purchased at each
price.

3.10.1 Inventory Variables
The following inventory variables need to be filled in order to work with inventories. Since
inventories are the most complex accounting part which needs serious attention of accountants,
we should carefully follow the following elements to setup inventory default.
Entering Inventory Item Default Information

The information the item default screen is displayed as three folders with a label on each tab. The
fields on only one tab are visible at a time, but you can view others by selecting a tab. Tabs break
up the setup steps in this section:
To get to these tabbed folders do this:

 From the maintain menu, select default information, and then select inventory items
from the submenu thin inventory item defaults windows displays as shown on Window
16
 G/L Sales Accounts-These are typically income type accounts for all item classes.
 G/L inventory /Wage-For stock and assembly items this is an inventory type account.
The other item classes use a salary or wage expense type account.
 G/L Cost of Goods-These are cost of goods sold type’s accounts.
 Costing-you can choose one of the three costing methods; FIFO, LIFO or Average.
 Fright-you need to enter the G/L default account for freight charges o sales invoices.
This account will be used every time you enter the fright on invoices.
Window 16-inventory items default screen

Entering Inventory Items
To get to inventory maintenance information:

1. From the maintain menu, select inventory item and then the maintain inventory items
window displays :
Window 17 Maintain Inventory Items Screen

Enter an ID for the new inventory item at the item ID fields and pres the “entry Key”
you can enter an ID of up to 20 alphanumeric characters for a new inventory item.
2. Enter a description: you can enter up to 30 alphanumeric characters for the description.
This description is the short description that displays in the item lookup lists
3. Choose item class: fix classes of inventory items are allowed (like stock item, Non stock
item, service, etc).
4. Enter the remaining fields like sales price, unit of measure, location, and cost price.
5. When you are finished filling in the window, elect the above command icon.
3.10.1.2 Entering Inventory Items Beginning Balances
Once you save an inventory item, but before you post any transactions, you can enter beginning
quantities for the item. The beginning balance for inventory items includes the quantity, unit
cost, and total cost of the inventory. You only use this when you first enter beginning balances.
However, if you enter an incorrect unit cost for a beginning balance, this is the only place where
you can change it.
The total amount of your inventory beginning balances entered here needs to be the same amount
you entered in your chart of accounts beginning balance for inventory. If you don’t do this, you
general ledger and financial reports will not match with your inventory reports. Use the
following steps to enter inventory-beginning balances:
1. Highlight the newly entered inventory item from the list box or select the item ID for
which you want to enter or change the beginning balance.
2. Enter quantity-this is the number of items you have in stock
3. Enter unit cost-enter the cost of the item per unit
4. Total cost-this is calculated by multiplying the quantity by the unit amount.
5. When you are finished entering the beginning quantities, select the ok icon to return to
the inventory items window.
Note: once you enter the inventory item, you can enter another inventory item, or end your
session with inventory items by selecting the close icon.
Activity 3.7: Hands on computer
Instruction: Based on the given information you are required to maintain the following
Inventory items.
No Inventory item Item ID Quantity Unit Beginning balance Date Price Costing
cost Method
1 Pepsi 200 2,000 2,00 $4000 12/31/04 2.50 FIFO
2 Shampoo 300 4,000 10.00 40,000 12/31/04 11.25 FIFO
3 Soap 400 1,000 1.00 1,000 12/31/04 1.50 FIFO
4 Flowers 500 2,000 5.00 10,000 12/31/04 5.75 FIFO
5 Biscuits 600 5,000 1.00 5,000 12/31/04 1.75 FIFO

Lo4:- Produce reports
Processing Accounts Payable Data
Introduction
It is the usual manner in business to sale and purchase service, and goods to customer and
suppliers on account basis. Account payable is an open account, which means an oral agreement
between the buyer and seller, and requires the buyer to make payment of a specified sum of cash
within the discount period to the seller. Normally account payable should be paid out within one
year and no interest is calculated on it.
Account payable
The following procedures need to be followed in order to work with account payable data. The
procedures normally involve purchasing of items and services on account, maintaining vendors
and making settlement of liability to the vendors.
Purchase and payment journals
Purchase of merchandise inventory from vendors /suppliers could be accomplished in to two

ways. We can purchase on credit or on cash from vendors. Vendors usually provide a purchase
discount to facilitate faster cash collection from their customer. This purchase discount terms
have been shown in vendors default information how we can maintain it.
Entering a vendor invoice
To enter a vendor invoice, from the task menu select purchases / Receive inventory, Then the
purchase /Receive inventory screen will appear. In the purchases? Receive inventory, there are
two tabs:
 Apply to purchase order-when you select a vendor who has open purchase orders apply to
purchase order tab displays, allowing you to select which purchase order to receive items
against.
 Apply to purchases- if you select a vendor with no open purchase orders; this tab displays
by default, so you can enter a purchase that did not originate on a purchase order. In
addition, even if you have selected a purchase order and received items against it on
apply to purchase order tab, you may select this tab to enter purchase not no the purchase
order on the same invoice.
If you want to enter the purchase of an item that did not originate from a purchase order, enter
purchases using the following steps.

1. From the task menu, select purchase /Receive/ inventory then the purchases /Receive
inventory window displays (see Window 23 below)
Window 23 purchase / Receive inventory screen
2. Enter or select the vendor ID the name and address information is filled in automatically
when you select an existing vendor.
3. Enter the vendor’s invoice number in the invoice # field. This is a required field.
4. Enter the date of the transaction.
5. Select the accounts payable general ledger account for this purchase on financial
statements this will be your accounts payable liability account.
Note: if the hide general ledger account global option is activated, the A/p (account payable)
account field will not display. Select he journal icon to display the accounting behind the screen
window. You can then change the A/p account ID. Select ok command button to return to the
purchase Receive inventory window.
6. if there are open Pos (purchase order), apply to PO tab is in front. To enter a purchase,
select apply to expense tab.
7. Enter the information for each item being purchased on a separate line. Enter the quantity
being purchased then enter or select the inventory ID (if the item is not in your inventory,
you must add it first) for the item being purchased if applicable.
 The description for purchases displays in the description field.

8. Press enter to accept the default description, or enter another description.

9. The default G/L purchase accounts that display for each line item is based on the
vendor’s purchase account default or the item ID selected. You can change these, if
necessary.
Note: if the hide general ledger account global option is activated the general ledger account line
item field will not display select the journal icon to display the accounting behind the screens
window. You can then change the line items purchases account ID. Select ok to return to the
purchase /Receive inventory window.
10. Enter the unit price (the number of decimal places is selected in global options) for this
item or enter an amount in the amount field and the unit price will be calculated. The
default is the last posted price for this item.
11. Assign a job ID for each non stock line item if you are tracking job costs.
12. Continue entering line items until you have completed the purchase invoice.
13. If you have paid a partial or full payment at the same time you received this invoice,
select the amount paid button. A window displays so you can enter the amount.
14. When finished, select the save or post icon to record the purchase.
Making Payments
This allows you to write checks for vendor invoices, for payments that don’t have a vendor
invoice, and for miscellaneous payments.
Note: The fields of the distribution box differ depending on whether you are applying the
payment to invoices or expenses. Note the apply to invoices and invoices, the apply to invoices
tab will be in front. However, if you are entering a payment to a one time vendor not in the
system, the apply to expenses heading is defaulted.

Window 24 vendors payment screens
Pay Vendors
There are two basic methods of paying vendors:
 Apply vendor invoices previously entered with the purchases selection of the task menu.
 Enter a cash purchase any payment for which you do not enter a vendor invoice see enter
a cash purchase for further information. Steps to enter vendor invoices:
1. Select payments from the tasks menu then the payment window screen displays as
shown above in Window 24
2. Select the vendor you wish to pay the invoices display in the list distribution box.
3. Enter or select the bank account from which you will be writing the check.
4. If you want to pay the invoice in full, place the cursor in description, discount, or
amount paid column, then select the pay icon. If you want to make partial
payment, enter the amount in the amount field of the invoices you want to pay.
5. If you want to make a partial payment, enter the amount in the amount field of the
invoices you want to pay.
6. When you are finished, select the post or save icon.
7. Finally the program did the following entry behind the screen:
 Debits account payable for the total amount

 Credits the cash account for the net check amount

Credits the discount taken account (if applicable)
Window 25 vendor payment screen (miscellaneous payment screen)
Enter a manual check

To enter a manual (hand written) check, the following steps may be used.
1. From the tasks menu, select payments then the payment window screen displays (see
Window 25)
2. Enter or select the vender ID and the check date.
3. Enter the check number; Peachtree accounting considers all payments with a check
number assigned as printed. If you print the check with a check number already assigned,
the word “Duplicate” will display on the check.
4. Enter a short description about the transaction in the memo field.
5. Enter or select the bank account from which you will be writing the check.
6. Select the apply to expense tab.
7. Enter the information for each item being purchased then enter or select the inventory ID
(if the item is not in your inventory, you must add it first) for the item being purchased, if
applicable.
8. Check the general ledger accounts affected by the transaction.
9. When finished, select the save or post icon to record the check.
Enter a cash purchase

A cash purchase may either be a check that you write to a vender or other payee that doesn’t
have an invoice, or it can be purchase for which you have actually paid cash. A cash purchase
needs to be applied to expenses. To do this:
1. Select payments from the tasks menu.

2. Select the vendor to receive the cash purchase, or press ENTER to skip the ID field and
in the name in the pay to the order of entry box.

3. Type in CASH if you paid cash for the purchase.

4. If you choose a vendor with existing invoices, select apply to expenses at the top of
distribution list box.
5. Enter the information in the apply to expenses distribution box. Make sure you enter
appropriate general ledger account.
6. Select the save or post icon.
.2 Using account payable reports
The account payable reports detail transactions and other information for all of your purchase
and payments.
To print accounts payable reports:
From the reports menu, select account payable report group, thus
The following report will be listed:
1. Vendor list this report shows all vendors names, addresses, contacts, and telephone
numbers.
2. Check Register List check numbers with payee and check amount.
3. Vendor Ledgers Show each vendor with detail transaction information as well as
outstanding balance vendor.
4. Cash Disbursement Journal List payment sin journal format use this report to verify
general ledger posting accounts payment transactions.
5. Aged payable List each vendor with outstanding invoices aged in the appropriate aging
categories.
Processing Account Receivable Data
Introduction
Account receivable is a claim against customer. It is also an open account, which is not
accompanied with notes. Account receivable arises from credit sale of merchandise inventory
and services to the customers. Peachtree completes accounting provides an on screen receipts
and movies to record credit tan cash sales. In this section we will try to see how to maintain cash
and credit sales in Peachtree complete accounting.
Account receivable
To maintain account receivable and the related transaction follow the following procedures.
These procedures are sale of items and services on account; receive payments from customers
and making reports.
Enter Manual Invoices
If you sale your products or services on account you may use the following steps to enter and
produce a manual invoice for a customer.

1. From the tasks menu, select sales /invoicing and then the sale/ invoicing window displays
see Window 26
Window 26 sales invoicing screen

The sales /invoicing window have two folder tabs:
 Apply to sales orders: when you select a customer who has open sales orders this
tab displays.
 Apply to sales: when you select a customer with no open sales, this tab displays:
2. Enter or select the customer ID from the look up key and press enter.
3. Enter the invoice No, be sure to write the number (or anything) in the invoice number
entry box.
4. Enter the invoice or transaction date.
5. Select the apply to sales folder tab (if it not selected)
6. Enter the quantity sold of this item. Once the quantity is entered, it is multiplied by the
unit price to determine the amount.
7. Enter or select the item you sold, you can use the look up key to display the product list.
8. Enter description enter a short reference that identifies the source of the transaction. You
can enter up to 160 characters for the description.
9. Select the general ledger account affected by the transaction. Enter the general ledger
income account number to use when recording this sale.
If you enter an item number, this defaults from the sales account you entered for the item
in the inventory item selection of the maintain menu. If you do not select an inventory
item, it defaults to the customer’s default genera ledger sales account. To change the
account ID, enter or click on the look up key to see a list of existing accounts.
Note: if you have the hide general ledger accounts global option activated, the general
ledger account field with not display in this window. To modify the general ledger
account used for this transaction you must select the journal icon.
10. Enter unit price: you can either accept the number that defaults here when you entered an
inventory item, or enter a new number. If you did not enter an item ID, you can skip this
text box by pressing ENTER, and enter the total for the line in the amount column.
11. Enter the sales tax to be applied to the invoice.
12. This is the inventory item sales tax type. It defaults from the type you setup for this item
in the inventory items selection of the maintain menu.
13. Amount: Peachtree accounting calculates the amount by multiplying the quantity by the
unit price.
14. Select job from the job field look up list. To lookup a job (cost center or department) in a
list, right click your mouse in the job ID field a list of jobs (cost centers) from which you
can choose. To choose a job, you can double click it, or select it and click the ok button.
15. When finished, select the save or post icon to record the invoice.
The following icons may display on the customer list box:
Ok: this tells Peachtree accounting to select the highlighted record and close the box.
Cancel: this tells Peachtree accounting to close the box without selecting a record
Find: this allows you to search for a string of characters. The search will cover any text you can
see in the displayed list, including reference # (number), Amount, ID and Name. For example, if
you Enter 100 here. You can enter either upper-or-lower- cash letters; It is not case sensitive.
Press ENTER after you type the text to find in the entry box.
Next: if you have entered search text; you can use this button to find next instance of the text. If
there is no next instance, selecting this finds the first instance in the lookup box. If there is no
instance at all, selecting this does nothing.
Edit: this displays the maintenance window where you can change information for the record.
New: this is another way of creating a record. The window will display the appropriate maintain
window where you can enter a new vendor, customer, etc.
Help: displays on line help you wanted to search on all the jobs .
Receipts
This allows you to enter all checks and cash slips you receive and deposit in you bank account.
There are two ways you can account for receipts in Peachtree accounting. These are:
 If you sent an invoice to a customer, you apply the receipts to the invoice. Invoices
entered through the sales /invoicing selection displays as distribution lines when you
enter the customer ID. You can check the pay column beside each invoice being paid in
the full by this receipt.
 If you made a direct sale that didn’t require an invoice, you use receipts and enter in on
the apply to revenues tab. This requires you to specify a check number and sales account.

Receive payment from customers
When a customer pays an invoice, enter the amount in the receipts window. To enter customer
payment on an invoice or when a customer pays an invoice, use the following steps to enter the
transaction:
1. From tasks menu, select receipts and then the receipts window displayed as shown on
Window 27 below.
Window 27 Receipts screen
2. Enter a deposit ticket ID that can easily represent the type and source of payment. This
will make account reconciliation easier to manage. Peachtree automatically enters the
deposit ticket ID will display as one lump sum account reconciliation. If you want this
transaction to be reconciled as a separate item, item, enter a unique deposit ticket ID.
3. Enter or select the customer ID. After you enter the customer ID, the invoices owed by
that customer will display in the apply to invoices tab. as shown
below on see Window 28.
Window 28 Receipts screen (apply to revenue)
4. Enter a reference number that will help identify the receipt (for example, the customer’s
check number).
5. Select a payment method (for example, cash or check)
6. In the cash account list, enter or select the bank account in which the receipt is deposited.
7. In the apply to invoice tab, select pay check box next to the invoices the customer is
paying:
 If the customer has paid the invoice in full, place the cursor in the amount column
for the invoice and check the pay box. The system will fill in the amount paid.
 If the customer has only paid a partial amount on the invoice, enter that amount;
the pay check box is then automatically selected.
8. Select post or save to record the receipt.
Enter a cash sale

When a customer pays for an item and there is no invoice, enter a cash sale.
1. From the tasks menu, select receipts and then the receipts window displayed as
shown on Window 27
2. Enter the deposit ticket number
3. Enter a customer ID or name (e.g. Cash customer)
4. Enter a reference number for this transaction. This must be a unique number, and
is generally the cash receipt number.
5. Enter the transaction date
6. select the bank account in which the receipt is deposited
7. select the apply to revenues tab
8. Enter or select type of product or service you sold in the same way as you do in
sales invoicing
9. select save or post when finished
Enter and Apply a Credit Memo

Occasionally, you may need to issue credit for a customer. To do this:
1. select sales invoicing from the tasks menu

2. Enter the amount of the credit memo as a negative by using a minus sigh before the
quantity or the amount.
3. If you are using the batch method of posting, select the save icon and then run the post
option from the system selection. If you are using the real-time method, select the post
icon.
4. select receipts from the tasks menu
5. Once you have entered the customer ID, the credit memo displays tin the distribution list
box
6. select the credit memo and select the pay icon
7. Then select the original invoice and select the pay icon or enter the amount of the sales
return. Don’t select any other invoices.
8. The check amount should be Zero when you save or past the transactions.
Editing or Deletion an Invoice

If you would like to edit or delete an invoice for a customer and you have already entered a
receipt, you may need to first the receipt before you can edit or delete the invoice. You need to
delete the receipt if you want to change the invoice number or the customer on an invoice, or if
you want to delete the invoice. Follow the following steps:
1. From the Task Menu, select Receipt. Then select the Edit Records icon so you can delete
the receipt that you received for the partial or full payment.
2. From the list, select the receipt for the invoice and then click on ok.
3. Once the receipt is displayed, select the erase icon to delete the receipt.
4. From the task menu, select sales / invoicing. Then select the edit Records icon so you can
edit the original invoice.
5. From the list, select the invoice that you want to edit and then click on ok.
6. Make your changes and click on the save or post button.
. Using Account receivable Reports

The account receivable reports detail transactions and other information for all of the sales both
credit (invoiced) and cash sales.
To print account receivable Reports:
From the report menu, select accounts receivable report group and then the following report
will be listed;
1) Customer list: the report shows all customer’s names, addresses, contacts, and telephone
numbers.
2) Invoice Register: the report lists each invoice number with date, quota number,
customer name, and invoice amount.
3) Sales journal: lists sales transaction in journal format. Use the reports to verify general
ledger posting accounts of sales transactions.
4) Cash receipts journal: list receipts in journal format: Use this report to verify general
ledger posting accounts or receipts journal.
5) Customer ledger: list customers with detail transactions as well as outstanding balance
per customer.
6) Aged Receivable: list each customer with outstanding invoices aged in the appropriate
aging categories.
Processing payroll Data
 Payroll
Introduction
Payroll refers to the total sum pf employee earnings, deductions, addition, net pay and other
elements in the payroll system. We can process information through computerized accounting.
The following discussion illustrates how to process payroll data by using electronic data
processing system.
Payroll
Payroll facility provides the user to manipulate the necessary payroll transaction using
computerized accounting so the user needs to follow the following procedures to handle payroll
relating data.
Entering a payroll check: the payroll check amount (net pay) is automatically credited to the
cash account that you have specified when you opened the payroll entry window for the first
time. When you pen the payroll folder and select the payroll entry icon, you will be prompted to
‘’select a cash account’’, then select ok to continue then automatically the payroll entry window
will appear as shown below on
The following fields require information from you in order to process a payroll check.
Employee ID: Enter or select the employee ID code. If you select an hourly employee, the salary
amounts fields will change to hours worked.
Check Number: if you want Peachtree to print the check, allow the check number field to remain
blank. A number will be assigned when the check is printed. If this is a manual check, you can
inter the check number.
Date: Enter check date for this payroll.
Window 29 payroll entry window

Cash Account: what will display is the cash account that you selected when you opened the
payroll entry window. You can charge this account if necessary. Payroll End: Enter the closing
date for this payroll period.
Weeks in pay period: Enter the number of weeks covered by the pay period.
Hours worked/salary Amounts: If the selected employee ID is an hourly worker, the bottom of
the screen will display the default for the employee’s regular time, corresponding to the weeks in
pay period entry. You can make changes to the number of hours for the period. For salaried
employees, this section will display the employee’s regular salary for the pay period.
Peachtree will automatically calculate Gross pay. It will show the deductions and net pay. You
can make changes if there is an exception from the default. When you have verified that the
amounts are correct, then select save.
3.14.1.2 Paying a Group of Employees

Sometimes it happens many employees receive a salary (or work the same number of hours from
one payroll period to the next). In that instance, your paying a group of employees is a more
efficient way to process payroll checks. You can pay all or some of the employees or sales
representatives in a two-step process: first by filtering and then by selecting the employees to be
paid.
These steps pay a group of employees:

Step 1: Select the select for payroll Entry icon from the payroll Navigation folder.
Step 2: Select the pay frequencies you want to include in the payroll
Step 3: Select whether you want to pay hourly or salary to both groups of employees.
Step 4: Select whether you want to pay a range or all employees.
Step 5: Select OK when you are finished. After selecting the filter options, the select
Employees to pay window will display.
Step 6: Enter (or change) the date to print on the check and the ending pay dates.
Step 7: Verify that the payroll checking number appears in the cash account field.
Step 8: Change deductions or allowances by selecting the detail icon after
you Highlight an employee.
Step 9: Make any changes to the field’s hours, salary, or number of weeks.
Step 10: For any employee you don’t want to pay, uncheck the pay box.
Step 11: Select the print icon to print the checks.

Lo5:- Ensure System Integrity
Printing Payroll Checks
Peachtree provides three options for printing payroll checks. You can print one check at using
the print icon. You can print a batch of checks using the payroll reports window. Finally, you can
print checks using the select for payroll entry (previously described), which, in effect, combines
the process of entering a batch of checks and of printing them.
Follow these steps to print a batch of checks saved in payroll entry without a check number.
Step 1. Open the payroll navigation aid folder
Step 2. Select the payroll reports icon and then the select a report window will displayed.
Step 3. Scroll through the report list and double click the payroll checks folder.
Step 4. A list of check forms will display below the payroll checks folder
Step 5. Select the practice button in the lower right hand corner to print a
practice Check.
Step 6. Verify that your printer has been set up property. If an adjustment is necessary,
Select align to make adjustments,
Step 7. Select ok
Step 8. when prompted, enter the first check number.
Voiding a pay check
You can void checks like you void disbursement checks entered in accounts payable. When you
void a payment, Peachtree creates a general ledger entry that reverses the payment. During
account reconciliation, both the original payment transaction and the voided payment are
automatically cleared.
Step 1. Open the payroll navigation aid folder

Step 2. Select void checks
Step 3. Select the G/L cash account used on the pay check to be voided. The void existing checks
window will display
Step 4. From the existing checks list, highlight the payment you want to void.
Step 5. Select the void button
Step 6. Verify the payment information. Enter the date on which you want the payment to be
voided.
Step 7. Select ok
Step 8. Repeat this process for each payment you want to void.
Step 9. Select close when finished
Printing a payroll check register
The payroll register lists all pay checks, whether or not they have been printed. The check
register displays the reference number assigned to the pay checks (if it has been printed or a
manual check number has been entered).You The register also shows the date the transaction
was posted to the general ledger, the employee’s name, and the net amount of the pay checks.
The procedures for printing a payroll check register are follows:
Step 1. Open the payroll folder

Step 2. Select the payroll reports icon
Step 3. Select check register from the payroll report list
Step 4. Select screen
Step 5. Accept the default settings for the report filter. The check register will be displayed.
Processing Inventory Data

Introduction
Generally the term inventory is used to indicate the aggregate of those items of tangible personal
or organization properties, which include
 Merchandise held for sale in the normal course of business
 Finished goods or work- in process in manufacturing companies
 Materials to be consumed in the production of goods or services to be available for sale
(raw materials)
 Materials intransient and items given on franchise bases for sellers, etc
Merchandise inventorying being continually purchased and sold, is one of the most active
elements in the operation of wholesale and retail business. The sale of merchandise provides the
principal source of revenue for such enterprises. The cost of inventories sold is the largest
deduction from net sales in merchandising firms. In addition to the above reasons, in inventory
of a business organization substantial amount of working capital is tied- up or invested. Hence, it
is very important item in a merchandising business.
Inventory
Peachtree Accounting tracks the inventory items you buy and sell, and automatically update the
quantities after posted transaction. It also allows you to store items you do not stock, but that you
enter on invoices. This makes entering invoices faster for you.
Purchase Inventory Items
To enter the purchase of inventory items:

1) Select purchase from the task menu
2) Make sure the purchase order box is not checked
3) After you are done filling out the screen, select the post or save button
When you enter and post inventory items, three things happen. These are:

1. The amount of stock level of the item is updated (stock items)

2. The average cost is updated, based on the unit price entered (stock items)
3. For stock type items, the inventory account is debited, to debited, to offset the automatic
credit to account payable.
N.B Average cost is computed using the method you chose when you setup the inventory item.
The weighted average method, last-in-first out (LIFO) or first-in-first out (FIFO).
Sell inventory items
To sell an inventory item using an invoice:

1) Select sales invoicing from the tasks menu
2) In the distribution list box, enter the quantity purchased and the inventory item code.
When the transaction is posted, the cost of sales is computed, and a journal entry is
created with the last day of accounting period as the date.
3) Enter the inventory item code and the quantity purchased. When the transactions are
posted, Peachtree Accounting computes the cost of sales. A journal entry is created with
the last day of accounting period as the date.
. Adjust Inventory Items
You use inventory adjustments selection to make changes to on-hand quantities of inventory
items, and also track those changes. If you use job costing and purchase stock items for
inventory, you can also use this to remove items from inventory and apply them as an expense to
a job. This procedure is necessary for stock or assembly items you used in a job and did not enter
on the customer’s sales/ invoices.
To enter an inventory adjustment, use the following steps:
1. From the tasks menu, select inventory adjustments and then the inventory
adjustment window displays as shown below on Window 30

Window 30 inventory adjustment screen

2. Enter or select the item number you want to adjust. This can only be an item
classified as a stock item or assembly item the name field is automatically filled in
with the name that was entered for the selected item in the maintain inventory
items window.
3. Enter anything you like in the reference field up to 20 alphanumeric characters.
For example. You could enter your initials or the data in this field.
4. Enter or select the data the change in inventory occurred, or the date or the
physical inventory count. The date is automatically filled in as the current system
date.
5. Enter or select a job to attach this adjustment to, if you are tracking jobs.
6. Enter or select a G/L account from which to take this adjustment out, and enter a
unit cost for the inventory item. (For positive adjustments only). The default G/L
source account is the cost of Goods sold account. The other account affected by
adjustments is the inventory account.
7. The unit cost default is the current cost of the item and must be positive. Enter the
amount to which to adjust the quantity. The quantity on-hand is already filled in,
and Peachtree Accounting calculates the new quantity after you enter the
adjustment.
8. If you know the reason for the adjustment, enter it and then Select the save or post
to process the adjustment.
Print Inventory Reports
Use the inventory reports to keep track of the amount and cost of inventory.

To print inventory reports select inventory report from the Reports menu and then select
inventory report
The following report will be listed( and you can open read and print them):
1) Inventory valuation report: show the value and average cost for all items that are in
stock.
2) Inventory Adjustment journal: Lists inventory adjustments journal format. Use this to
verify general ledger posting accounts for inventory adjustment transactions.
3) Inventory stock status Report: Lists items, the on hand quantity and reorder quantity.
Use this report to determine what an item needs to be recorded.
4) Physical inventory list: Use this worksheet to check the actual number of items on hand
versus what the system report on hand.
Processing Miscellaneous Accounting Data
 Types of general journal entries in Peachtree Accounting
Introduction
Peachtree Accounting allows the user to enter transactions, which do not have their own screen
like purchase, payment, receipts, inventory, and etc
General journal entries in Peachtree accounting
You can use the general journal to enter those types of transactions that are not readily
categorized in the general journal like depreciation expense, purchase of supplies, payment of
miscellaneous expense etc. You could also edit adjustment made in account reconciliation here.
Unlike other screens in Peachtree automatically distributes certain amounts; based on guidelines
you set in maintain menus.
Steps to enter general journal entries

1. From the tasks menu, select general journal entry the general journal entry window
displays
2. Enter or select the date of the transactions you want to enter.
Peachtree defaults this date to the Peachtree Accounting system date if you are
In an accounting period that is different than the system date, then the first day
Of that period displays. You can also select the edit records icon to edit a
General journal entry in the current or alternate accounting period.
3. Select the reverse check box (if applicable) to have the transaction automatically reversed
the first day of the next accounting period. Reversing means that debits become credits
and credits become debits.
4. Enter a reference for the transaction up to 20 characters. If you enter a number reference,
Peachtree Accounting will increment future general journal entries by one while this
window is open.
5. For each line enter or select an account ID. Then, enter an amount in either the debit or
credit columns.
6. Enter a description of each line you are entering for the transaction. The description will
display in general ledger and various reports.

7. If the transactions associated with a job, enter or select a job ID. You can later apply the
general journal entry to a customer invoice, if needed.
8. Once the out of balance field is zero (0.00), select save or post to record the transaction in
the general journal.
Print general ledger reports

Use the following step to print general ledger reports:
From the reports menu, select general ledger report group and then the following reports
will be listed
(and you can read or print them)
1. Chart of accounts: List each general ledger account numbers, account
description and account type.
2. Working trial balance: Use this as a work sheet to make adjustments to account
balances.
3. General ledger trial balance: List the current balance for each general ledger
account
4. General journal: Lists transactions in journal format .Use this to verify general
ledger posting accounts for all transactions
5. General ledger: shows all transactions in each account for the current period.
Remark: you are required to enter the necessary additional information by your self to complete
the transactions such as invoice number, receipt number, customer address, etc
Task 17 Reconciling Accounting data
 Types of account reconciliation in Peachtree accounting
Introduction
Reconciliation is the process of bringing equals the bank statement balance and the book records
of the organization at a specified period of time to make adjusting entries before the preparation
of financial reports of the organization. Peachtree Accounting reconciles the selected G/L
accounts against your monthly statement. You can apply transactions in three different
categories:
1. Deposit-in-transit
2. out standing checks
3. Other outstanding items (such as general journal entries)
Remark. If you are using the batch method, post your accounts to the general ledger before you
reconcile. This ensures that you are using accurate information.
To reconcile, you enter the bank statement date and the ending bank balance. Then you need to
clear transactions that are reported on the bank statement, each time you clear a transaction, the
difference is reflected in the bank account field.
To clear transactions, check the first column for deposits in transit, outstanding checks, or other
outstanding items. If you need to make an adjustment, use the adjust icon at the top of the
window adjustments are saved in the general journal and can be edited there too.
Remark: you can only reconcile an account once per accounting period you must change
accounting periods to the date reflected on the monthly statement to avoid past and future
reconciliation errors.
Types of account reconciliation in Peachtree accounting
Peachtree Accounting allows you to reconcile any account in your chart of accounts. You can
only reconcile an account once per accounting period. You must change accounting periods to
the date reflected on the monthly statement to avoid past and future reconciliation errors. Always
reconcile an account before closing the fiscal year. You can not reconcile an account with a bank
statement dated in a closed fiscal year. These are the fields that display on the bank
reconciliation window:
 Account to reconcile
 Checks and credits
 Deposits and debits
 Cleared transactions
 Transactions not cleared
 Un reconciled difference
 Statement date
 Statement ending balance
 Outstanding checks
 Deposits in transit
 G/L system balance
 Beginning transactions
Account to reconcile
Typically, bank accounts, cash accounts (such as petty cash), and credit card accounts are
reconciled.
Statement date: Type the closing date from the bank’s statement and press the enter key. The
statement closing date must be within the current accounting period.
Checks and credits: New transactions that credit the G/L account display there. Also, old
transactions not cleared prior accounting periods display, For each transaction, reference number
(check number in most cares), amount, date, and vendor / payee display, Select the clear check
box to indicate that transaction listed her (In Peachtree Accounting ) is also listed on the monthly
statement report. Once cleared, these transactions will not display in account reconciliation for
future accounting periods.
If you void a check in Peachtree Accounting, the original check will display in the checks a
credits section. The void (reverse) transaction will display in the deposits and debits sections.
Both should be cleared during reconciliation in order to balance your account
Statement ending balance:Enter Remark the final balance from the statement and press the enter
key.
Deposits and Debits :New transactions that debit the G/L account display here. Also, old
transactions not cleared in prior accounting periods displays. Reference number (for example,
deposit ticket ID), amount, date, and description display for each transaction. Select the clear
check box to indicate that transaction listed here (In Peachtree Accounting) is also listed on the
monthly statement report. Once cleared, these transactions will not display in account
reconciliation for future accounting periods.
If two or more receipts entered in Peachtree Accounting have the same deposit ticket ID, they
combined and display as one line item. Daily receipts are typically grouped together as one
day deposit. Therefore, all receipts entered for a particular day display as one deposit
transaction in the account reconciliation. To reconcile these transactions separately, exist
account reconciliation and enter unique reference IDs for these transactions.
Outstanding checks: This section displays the sum of all checks and credits in the account
reconciliation window which the clear check box is not selected. Unclear transactions are those
entered in Peachtree Accounting but not listed on the statement.
Cleared transactions: This section displays the sum of all deposit and debits in the account
reconciliation window in which the clear check box is not selected. Un cleared transactions re
those entered in Peachtree Accounting but not listed on the statement
G/L system balance: This is the Peachtree Accounting general ledger balance as of the statement
date for the account you are reconciling.
Note: if you are using the batch method, post your accounts to the general ledger before you
reconcile. This ensures that you are using up-to-date information.
Unreconciled difference: This is the difference between the statements ending balance ant the
G/L system balance, less outstanding checks (credits entered in Peachtree but not included on the
statement) and including deposits in transit (debits entered in Peachtree but not included on the
statement).
When all transaction listed on the bank statement are entered and cleared in Peachtree
Accounting, and outstanding transactions have been accounted for, the un-reconciled
differences should be zero (0.00). If not check the bank statement to make sure that each
transaction listed is also entered in Peachtree Accounting. For example, a service charge
listed on the statement may need to be entered in Peachtree Accounting. You may need to
check with the bank or make on adjusting entry.
Beginning transactions. This window displays when you select the beginning transactions
button in the account reconciliation window. Beginning transactions provide a way to account
for transactions made prior to starting Peachtree Accounting that have not yet cleared the bank
(not appeared on the bank statement) . They are primarily used to resolve un-reconcilable
differences during the first account reconciliation. Future account reconciliation’s should, in
theory, display all transactions entered in Peachtree Accounting that needs to be cleared.

Note: Beginning transactions are not posted to the general ledger they are used only when
initially reconciling an account. Once you have reconciled an account two or more periods,
the beginning transactions should be cleared.
Steps to reconcile General Ledger (G/L ) bank account:

1. From the tasks menu, select account reconciliation. The account the reconciliation
window displays as follows.Window 31 Account Reconciliation screen .Window 31
2. Select the bank account you want to reconcile.

3. Enter the ending (closing) date from the bank statement date. The statement date you
select must be within the current accounting period
4. Enter the statement ending balance (the ending balance amount included on the bank
statement). A transaction that is available to be cleared is listed in two groupings
checks and credits deposits and debits. For each transaction, reference information
such as check numbers, amounts, dates, and vendor payees or descriptions display.
Check number sorts checks.
5. Select the clear box next to each item that is included on the bank statement. You can
also select all icons to select all transactions as cleared. Or, you can select the range
icon to enter first and last check numbers in a range to clear. Peachtree keeps track of
how many transactions recorded in the general ledger are cleared, how many are not,
and the associated totals. When all outstanding transactions for the account have
been cleared, the un-reconciled difference must be zero (0.00). If not, check all
transactions on the bank statement with the outstanding checks you have cleared you
may need to check the bank or make an adjusting journal entry.
6. Select the Adjust icon to enter adjusting journal entries the bank statement included,
but are not included in Peachtree Accounting’s General ledger. For example, you
may have to add bank services or finance charges. Select ok when done.
7. If you entered adjusting entries, select the clear check box next to each of
these items.
Note: if you enter adjusting entries and later need to change them. You can edit the
transactions using the general journal entry window.
8. When you have successful reconciled the account (the un-reconciled difference is
zero), select ok to close the window.
To view Account Reconciliation Reports
Use the following step to print Account Reconciliation reports:

From the reports menu, select Account Reconciliation Report Group.
The following repost will be listed(and you can read or print them):
1) Account Register: Lists all transactions in the account, along with running balances.
2) Account Reconciliation: lists bank balance along with un-cleared transactions
3) Deposits in Transit: detailed listing of deposits that have not yet cleared your bank.
4) Outstanding checks: detailed listing of checks that have not yet cleared your bank.
5) Other outstanding items: detailed listing of miscellaneous transactions that have not yet
cleared your bank.
Producing Financial Statement

Financial statements are reports, which show the financial position of the organization at a
specified period of time. We can also see reports about Account Receivable, Account payable,
etc. by using Peachtree Accounting. To see the reports what you want, select the type of reports
you want to see from the reports menu. This window allows you to select the specific report you
wish to print or display. This box is the first window that opens for all the selections on the
reports menu. The reports, forms, and financial statements you select may be either those that are
predefined by Peachtree Account, or those that are customized by you using the appropriate
designer.
 To select a report or financial statement to view

 To select a report, financial statement, or form to print
 To select a report, financial statement, or from the design
To Select a Report or Financial Statements:
 Highlight the specific report or financial statement with the mouse and double-click or
 Highlight the specific report on financial statement and select the screen icon in the top of
the window.
Note: you cannot send a form to the screen to view, however, if you highlight the form and select
the design icon it will display its form at to the screen.
For certain reports that deal with transaction, you will notice a box around the lines containing
transactions. When you move the cursor over the transaction lines then the box display for each
line that contains transactions, and the cursor changes from an arrow into a magnifying glass
with a ‘’Z’’ in the center. Double clicking on transaction with the magnifying glass will show the
originating transaction (source document). You can choose to view or modify the transaction
here.
To select a report, financial statement, or form to print
 Highlight the report, financial statement, or form, and then select the print icon at the top
of the window. Or
 For forms only, double click the form you wish to print.
To select a report, financial statement, or form to design
 Highlight the report, financial statement, or form and then select the design icon
the top of the window. Or
 For reports and financial statements only, you can select the design icon while
viewing them on screen.
Select a report window :This is the window where you can select a report. At the top of the
window you can find a close icon, group icon, erase icon, print icon, screen icon, design icon,
copy icon, and help icon.
Fields:
 Report area
 Report list
 Description of report
Report area: This is where you select the area (account receivable, account payable, etc).
Highlight the selection to see a list of reports.
Report list: This is the specific reports, forms, and financial statement from which you can
choose. Each report and form’s icon indicates what type it is.
Description of report: This either describes the predefined reports, or the customized reports for
which you may have written a description.
Filtering a report: When you open a report and select option menu you will see three tabs. These
are:
Filter-This allows you to select the criteria for the reports you want to see. To see a filter for the
particular report you are using, select the report from the list below.
Fields-This allows you to select the fields to display on the report. Use this to determine where
the columns break on your report.
Format-Use this tab to set the font styles for the heading and body of the report. It also allows
you to set a default printer for the particular report you are using, and set the number of copies to
print. You can also select to have the report show special codes, such as the current period,
today’s date, as of date, and the company name
Financial statement options

Time frame you have the choice of a range of periods, current period, or current three periods. If
you select a range, use the form and to list boxes print page numbers checking this will print
page numbers on the top right corner of the page. Both the page number and the number of pages
are indicated. For example, if you are looking at page 5 of 20 page document, it will display on
the report as page 5 of 20.
Show zero amount-check this to show accounts with zero amounts.
Print all caps-check this if you want the report to print in all capital letters.
Right margin / Left margin-enter the size of the margins you want, in inches.
Default printer-this displays the printer set up window where you can select the printer,
orientation and size of paper you want to use.
Number of copies-enters the number of copies here. You can enter any number from 1 to 99
reports and financial statements.
This report or statement is read-only. You cannot make changes to this, but you can use this as a
basis for customizing. The financial statements list the following reports:
Balance sheet: Standard balance sheet is showing Assets, Liabilities, and capital.
Income statement: Income statement is showing income and expenses for the current period and
the year-to-date. Income and expenses are also shown as a percentage of the total income. Cash
flow: It is a statement of cash flow for the current period and the year-to-date.
Income / Budgets: It compares the current period and the year-to-date figures to the budget
figures. Budget figures are set up in the chart of accounts.
G/L account summary: It compares the current period and the year-to-date figures to the budget
figures.
Summary of duty three
In this specific duty, a lot has tried to acquaint students with processing accounting data in
computerized accounting system. Approaches of accounting data processing and ways of data
maintaining has successfully discussed to progress the student understanding in data processing
using computer in the application of accounting system.
The duty also has dedicated more than fifteen specific tasks to introduce and practice accounting
data maintaining, processing and reporting using application software. Application software is
deliberately designed to solve the specific problem of business organization, for instance,
Peachtree accounting is fully integrated the accounting application software which helps the
trainee to maintain, process and produce necessary reports timely.
Finally the duty focuses on processing of miscellaneous data processing and their maintenance
on the general journal. Transactions which don’t have specific screen to be maintained need to be
entered or maintained using general journal screen, specifically on Peachtree complete
application software, for example, recording of depreciation expense, payment of utilities,
payment for prepaid and etc. In addition to processing miscellaneous data, it also give emphasize
on reconciling accounting data in order to check the equality between different accounts; for
example, equality between cash at bank and cash at general ledger.
Answer Activities
Activity 1.1
1. Accounting system is a way by which managers are provided information for
decision purpose, and it is also the system of records business keeps
maintaining its accounting system.
2. It is an accounting system of processing information by using electronic
devices, which is faster than manual accounting system.
3. Transactions are events directly affecting the accounting system of the
business organization. They will have an increase or decreasing effect on the
specific account or more than one account at a time.
4. Among the uses of computer based accounting system the following could be
mentioned:
1) It process information faster than manual system

2) It provides timeliness information
3) It provides securities for the recordings of the business as far as one
can use start up codes
4) It avoids mechanical works of accountants like adding subtracting,
dividing or multiplying figures manually
5) It alleviates the burden of accountants in filling and documenting
reports
6) It adds accuracy on the works of accountant
7) It tries to minimize the space requirement to store documents on
cabinets, shelves and the like
8) It provides easy access to make adjustments with possible authorities
to make adjustments
9) It allows protecting unauthorized usage of information from the
computer
10) It allows a number of users to use the same data at a time through an
integrated net works
11) It access controller to view the works of their subordinate at remote
in their office, and etc
5. Changing supplier, changing of the accounting system, recruitment of
employee and etc.
Activity 1.2
1. Private accounting
-Accountants employed by a particular business firms or not for profit organization.
- Accountants who render accounting services on a fee basis and staff accountants
employed by them.
2. The amount of the equities of the enterprises is $275,000.00
3. Asset=$500,000.00+$300,000.00=$800,000.00
4. a) increase
b) decrease
c) increase
d) decrease
5. a) Covers a period of time
b) Specific date
c)Covers a period of time
Activity 1.3
1. Top down information
In top-down information flow, messages, orders, and the broad goal of the organization flow
from top-level management. Managers in top-level management govern the overall activities of
the organization and disseminate information like accounting policies, the mission of the
organization, bonus etc.
Bottom Up-Information flow
In bottom-up information flow, performance reports, grievance, technical problems might be

forwarded from lower-level management to top-level management. Supervisors, department
heads and other lower-level management bodies of the organization process this information..
Performance report
Performance reports are a means of communication between the information producer and the
decision maker. They help decision maker to make a sort of study about the efficiency of the
organization in channeling the resource of the organization in the best way or not.
2. Coding Examples in Accounting Systems- codes are widely used in accounting systems.
For example:It relates to customer doing, which is an example of activity coding, closely
related to the accounting function of distribution Accountants use the term distribution to
denote the process of extracting and accumulating detailed information from transactional data.
Posting invoices to a subsidiary ledger or posting payroll data to an expense ledger are
examples of distribution functions in an accounting system
Activity 2.1
1. A system is an inter-related set of concepts that work together within an identifiable
boundary to achieve some overall or common objectives. A system is a collection of parts
which are related to each other and which may depend on each other and which may
depend on each other and work together as a coherent whole.
2. A boundary: is a line that marks the inside and the outside part of a system and which sets
off or separates the system from its environment. It establishes the limits of the system.

Interface: is point of contact where a system meets its environment or where subsystems
meet each other. Interfaces have the following functions.
3. Top-level, middle-level and lower-level.
4. Sales processing system, purchase processing system, payroll processing system, general
ledger processing system, cash receipt and disbursement processing system and
production processing system.
5. Structured, unstructured, and semi structured problems.
ACTIVITY2.2
1.
 Ascertain the interest, background, and responsibility of the person to be
interviewed before the interview.
 Gather facts concerning the matter to be discussed before hand.
 Prepare a list of the questions to be asked during the interview.
 Obtain approval from the interviewee’s supervisor for the interview.
 Make an appointment that is convenient with the interviewee and be on time.
 Notify the interviewee before hand of the purpose of the interview and of the
matters that it will cover.
 Open the interview by explaining the interviewer’s role in the study, then draw
out information by pertinent questions, especially concerning the interviewee’s
knowledge of the situation, need for information, and ideas for improvements.
 Listen carefully to the interviewee’s answers with out interruption.
 When conversing do not resort to jargon, broad generalizations, personal
opinions, or irrelevant comments.
 Be natural, but business like, so that the interview flows easily
 Maintain a courteous, respectful, tactful, and friendly manner through out the
interview.
 Ask permission to take notes or use a tape recorder during the interview.
 End the interview with a summary of the discussion, a thank you, and a prompt
exit.
 Shortly after the interview, review and complete the notes taken or conversation
recorded; send a copy of the notes to the interview for review and correction.
2. System flowchart depicts the relationship among the input, processing, and output of an
accounting information system.
3. A data flow represents the flow of data between processes, data stores, and data sources and
destinations. Data that pass between data stores and either a data source or a destination must go
through some form of data processing that is, through a transformation process.
4.Resources are those things that have economic value to the organization. In the figure cash and
inventory are resources entities. Machinery and equipment, supplies, warehouses, factories, and
land are examples of other common organizational resources.
Events are the various business activities about which management wants to collect information
for planning or control purposes. There are two event entities: sales and cash receipts.
Agents are people which accomplish business transaction in the diagram. At least there are two
agents in the data modeling processes. These are internal and external agents. Internal agents are
employees and managers and external agents are customer and vendors could be the best
example
Activity3.1
1. Batch sequential system is one of the way of data processing system into the computer
based on a batch way but the batch need to be arranged sequentially.
Batch processing system is also one of the ways of processing data in to the computer
without sequence or any classifying mechanisms.
2. On-line real time data processing system allows the user to enter data immediately when
a transaction arises into the business transactions.
3. Direct accesses allow the user to see, edit, enter, or revise data directly from the computer
system.
4. Manual data processing system:
 It employs vouchers, sheets and checks

 It provides information less fast than computer based accounting system
 It accomplished manually the preparation of financial statements.
Computer based accounting system
 It fasters processing of transaction and producing reports
 It gather accuracy in computations and comparisons of data, reports, etc
 It cost effectiveness processing and storing of data and files
 It provides large range of choices for entering data and providing outputs
 It provides higher productivity for employer and manager, especially
when they effectively use computers to aid in their routine activity and
 It eliminates redundancy and storage cost
Activity 3.2
1. Application software is software which can accomplish a specific task and solve business
problem based on the programmer interest.
Operating system allows the computer to manage its own resources and run basic operation. It
also manages the hard ware of what to do, how to do, and when to do, but it doesn’t solve
specific problems of the business.
Compiler it translates source code instructions in a program written by as software writer into
object code. It also organizes all the instruction in a given set of source code to produce object
code.
Interpreter helps the user to analyze and executes each line of source code one by one.
Assembler allows the programmer to interact directly with the hard ware because it uses low
level machine language and faster than compiler to provide results.
Data management software it allows the user to store, retrieve and communicate dose of data in
the computers.
2. Data management software allows the user to enter data, manipulate, store, retrieve and
share among different users.
3.Personal finance managers let the user to keep recordings of income and expenses, write
checks, helps to communicate on line with the user banker in depositing and making
payments, and assists in planning the goal of the organization.

Small business accounting and tax software-this also helps to accomplish all the
accounting works and tack any data relating tax and alleviate the problem of organization
their claims and payables against the tax collecting agency.
Peach tree Accounting- it is well developed application software and can serve for multi
types of organization in order to handle their transactions.
Activity 3.8
1). H 2). F 3). E 4). B 5). C 6). K 7). G 8). I
SELF ASSIGMENT
I. Company Name and Address Information MERTO P.L.C.P.L.C. INXLUSW YOUR Own
Name, W1, K19, House # 1348, P.O.box, 42522-1-75-88-90, Fax 251-1-51-40-41 Addis Abeba,
Ethiopa.
- Business Type: private Limited Liability
- Chart of Accounts: build your own chart of Accounts
- Accounting Method: Accrual
- Posting Method: Real Time
- Accounting period: Jan-Dec 2003
- No of periods: 12
- First period data will be entered: September, 2003
II. Trial Balance as of August 31, 2003
Acct. No. Account DescriptionDebit Credit
1110 petty Cash 10,000

1115 cash at Bank saving 10,000
1120 cash at Bank Checking 35,000
1140 Account Receivable 1,800
1141 Allowance for Uncollectible 197
1145 Inventory 102,560
1150 Office Supplies 6,500
1160 Prepaid Insurance 2,800
1220 Equipment 50,000
1221 Acc. Deprc.- Equipment 5,000
1230 Vehicle 120,000
1231 Acc. Depc. – Vehicle 10,000

1240 Furniture & Fixture 50,000
1241 Acc. Depc. – Furnit& Fix 4,680
2110 Accounts payable 11,780
2115 Employee I/Tax payable 500
2120 Salary payable 5,000
2210 Mortgage payable 50,000
3110 MERTO P.L.C.’S Capital 257,615
3115 MERTO P.L.C.’S Withdrawal
3220 Retained Earnings 43,888
4110 Sales
4215 Sales Allowance
4220 Miscellaneous Income
5110 Cost of good sold
6220 Salaries & Wages Expense
6225 Shipping Expense
6230 Repair &Maint. Expense
6235 Income Tax Expense
6240 Supplies Expense
6245 Rent Expense
6250 Miscellaneous Expense
6255 Transport Expense
6260 Interest Expense
6270 Electricity Expense
6257 Fuel Lubricant Expense
6280 Telephone Expense
6285 Insurance Expense
6310 Deprecation Expense- Equipment
6325 Deprecation Expense- Vehicle
6320 Deprecation Expense- Furniture ______ ______
Total 388,660388,660
III. MERTO P.L.C.’S Customer Ledger balance as August 31,2003
Customer NameCodeAddressInv. DateInv.#Acc. Balance

KT KT 1001 Saris 09/01/03 0051 300
AB AB 1001 Piassa 09/01/03 0052 400
ET ET 1001 Merkato 09/01/03 0053 500
BE BE 1001 Bole 09/01/03 0054 600
Total 1,800
IV. MERTO P.L.C.’S Vendor Ledger balance of August 31,2003.
Vendor NameCodeAddressInv.DateInv.#Acc.Balance
EAT E 2001 Bole 09/01/03 0091 3600
PC P 2001 Mexico 09/01/03 0092 2180
BLTD B 2001 Merkato 09/01/03 0093 2000

SP S 2001 Piassa 09/01/03 0094 4000
Total 11,780
V. MERTO P.L.C,’S Stock Balance as August 31,2003-Use Weighted Average

Method
Product Unit of Cost Sales Qty on
NameIDMeasurePricePriceHandLocation
S S 1001 Cartoon 456 550 10 WH-1
HM HM 1001 Unit 25 30 200 Shelf-B-12
MCH MC 1001 Cartoon 500 650 100 Shelf-C-7
BI BI 1001 Cartoon 200 300 200 Shelf-C-7
HP HP 1001 Unit 20 35 150 Box 15
VI. The Owner provided you with the following Sales, Receipt, Purchase and payment
transactions for the Month of September 2003
SEPT 2. Sold on account 2 cartoons of S and 5 units HP ET by Invoice # 0055.

3. Collected Birr 400 from AB for settlement of outstanding Invoice # oo52, cash
Rec. #551 and Deposit Slip # 001.
4. Paid on account to PC for purchase of Inv. # 0092, 180 by CK# Fool12351, Ref. PV -1
4. Sold 2 cartoons of MCH and 3 units of HM Birr 1390 Cash Rec. # 552 and Deposit
Slip # 002 .
5. Purchase 20 cartoons of BI from BLTD $ 4,000 by CK# F0012352, Ref – PV – 2
7. Sold 2 cartoons of BI on account to KT by invoice # 0056.
7. Bought supplies on cash from EAT, $ 5000, by CK# F0012353 Ref. PV – 3.
8. Paid on account to SP for purchase of Inv. # 0094 Birr 4000 by CK#F0012354, Ref. PV-4.
10. Purchase office Furniture from OMEDAD on account $ 45,000, Inv. #009, Ref. JV-2
10. Received 600 cash from BE for settlement of Inv. # 005 by cash Rec. # 553
and Deposit Slip# 003
13. Sold 30 Units of HP on account to ET by Inv. #0057
13. Purchase 50 Cartoons of S from EAT on account, $ 22, 800, Inv.#0096,Ref.Jv-3
15. Purchase of computer from OMEGA systems on cash. $10,000, CK# F0012355. Ref. PV-5
17. Purchase pf 20 cartoons of MCH from PC on account $ 10,00 . Inv. # 0097, JV-4
18. Sold 3 Cartoons of BI to BE on cash Birr 900, cash Rec. # 554 and Deposit Slip # 004.
20. Purchase pf 40 units of HP on account from BLTD, $800, Inv.#0098,Ref JV-5.
24. Sold 10 cartoons of MCH to AB on cash Birr 6,500 cash Rec. #555 and Dep # 005.

26. Paid on account to EAT for purchase of In#0091, $3,600.CK# F0012356, Ref. PV-6
26. Collected Birr 300 from KT for settlement of outstanding invoice#0051, cash Rec.# 556,
Dep. #006
27. Paid on account to BLTD for purchase of Inv.#0093, $2000, CK#F0012357, Ref. PV-7
27. Sold 2 Cartoons of MCH and 20 unit of HM on cash Birr 1,900 to a cash customer, cash
Rec.#557, Dep007.
28. Settled monthly principal payment of $ 5,000 and interest of $ 375 on Mortgage loan by CK#
F0012358, Ref. PV -8
28. Granted credit to KT 1 cartoon of BI returned by him $ 300, Inv. # 0056 and credit Memo 3.
30. Sold 5 units of HM on account to KT Inv.#005.
30. Bought 10 units of HM on cash of 250 by CK# F0012359, Ref.Pv-9
30. Paid Electricity Expense Birr 200 for the month by CK# F0012360, Ref. Pc-10
30. Paid August’s Monthly payroll Birr 5, 000 covering Salary Expense Birr 5,500 less
deduction from Employees income Tax Birr 500 by CK# F0012361, Ref. Pv-11.
30. Paid Telephone Expense Birr 450 for the month by CK# F0012362, Ref. PV.12.
VII. Enter the following Adjusting Entries for the month ended Sept. 30, 2003.
- Supplies on hand 3,650
- Unexpired Insurance 1,400
- Deprecations Expense – Equipment 15%
- Deprecations Expense – Vehicle 15%
- Deprecations Expense – Furniture & Fixture 10%
Required:
a. Set up the Accounting System for MERTO P.L.C.P.L.C using Peachtree Accounting.
b. Record the transactions given above
c. Produce a Financial position form Balance sheet as of September 30, 2003.

LIST OF REFERENCES
Anders. Gregory E(1996) Microcomputer accounting: tutorial and application

rd
for Peachtree Accounting release 7, 0, 3 ed MC Graw Hill, U.S.A.
Alex I, Matthew L, Fundamentals of information technology, Leon press,
Chennai and vikas pub house PLC, Newdelhi.
Boockholdt, J.L. (1999). Accounting Information systems, Irwin McGraw-Hill.
th
5 ed, http://www.mhhe.com
Brightman and Dimsadle (1986) Using computers in an Information Age.

Delimar publishers Inc:USA
nd
Douglas, Patricia, Government & NFP Accounting Theory & Practice, 2 ed. The Dryden Press,
Florida, USA, 1995.
Distance Education Unit, AUC, Text for distance learners,
Jeffery L whitten and etal, (2000) System Analysis and Design Methods,
th
5 Mc Graw Hill .Companies, inc. U.S.A
nd
Hutchinson and Sawyer (1988), Computers: The User perspective 2 Ed,
Hand-out, prepared by MU, FBE, Department of Accounting

th
Han, Leon and Wilson Earl, Accounting for Governmental and Non-profit entities, 10 ed,
Richard D.Irwin, Inc, Issinois, USA, 1995.
Peachtree (1999), Peachtree Complete Accounting, Release 8, Peachtree

Software Inc, USA, www.peachtree.com
nd
Rynn, Edward & Freeman, Robert, Fund Accounting, Theory and practice, 2 ed. Prentice Hall,
Inc. New Jersey, USA, 1993


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Training, Teaching and Learning Materials (TTLM)

DALLOL TECHNOLOGY & BUSINESS COLLEGE

The Ethiopian TVET-System

TTLM Development Manual Date: September,2017

Welcome to the module “Set up and operate a Computerized Accounting

Summary of Learning Outcomes

After completing this learning guide, you should be able to:

o Read through the Learning Guide carefully. It is divided into sections

TTLM Development Manual Date: September,2017

Lo1:-. Implement an integrated accounting system

Meaning and role of an Information

The difference between data and information is:

TTLM Development Manual Date: September,2017

The characteristics of good information are relevance, timeliness, accuracy, cost-

Accuracy is measured by comparing the data to actual events. The importance of

Accounting Information System in general

TTLM Development Manual Date: September,2017

TTLM Development Manual Date: September,2017

Giv Production Cycle

Factors influencing Design of AIS

TTLM Development Manual Date: September,2017

Characteristics of accounting information

Generally, the qualitative characteristics of accounting information are discussed as :

Who are the Users of accounting information?

Events affecting organization and accounting information system

a) Events that affect the accounting system

i) Transaction which affecting the balance sheet of the organization, and

b) Events that do not affect the accounting system

Manual and computer-based accounting system

TTLM Development Manual Date: September,2017

Computer based accounting system is an accounting system of processing information by using

 It process information faster than manual system

TTLM Development Manual Date: September,2017

Summary of the Accounting Cycle: Computerized and Manual

Computerized System Manual System

 Analyze and classify business transactions by  Analyze and journalize transactions

Financial accounting information system and managerial accounting information

There are two fields of accounting, which provide information to the

Managerial Accounting system is designed to provide detail information to the managers in

TTLM Development Manual Date: September,2017

1. What is an Accounting systems

TTLM Development Manual Date: September,2017

Lo2:- . Process transactions within the system

 A System is an array of components that work together to achieve a common goal, or

TTLM Development Manual Date: September,2017

Characteristics of system theory

A System has nine characteristics

2. Interrelated Components – The function of one component is tied to the functions

 Sales Transaction processing system

 Purchases Transaction processing systems

TTLM Development Manual Date: September,2017

2.2.2 Subsystems of the Accounting system

Sales order Billing Account Cash

Reviewing the Systems Approach to Problem solving

TTLM Development Manual Date: September,2017

Developments of an Accounting System

An Information System is an arrangement of people, data, processes, interfaces,

Passengers like this arrangement because it is convenient. An increasing number of

TTLM Development Manual Date: September,2017

The components of an Information System