chapter 7: accounting information systems and business processes - part i

Chapter 7-1

Chapter 7-2

Chapter 7:Accounting Information Systemsand Business Processes - Part I

Introduction

Business Process Fundamentals

Collecting and Reporting Accounting Information

The Sales Process

The Purchasing Process

Current Trends in Business Processes

Chapter 7-3

Business Process Fundamentals

Overview of the Financial Accounting Cycle Journals

Ledgers

Trial Balances

Financial Statements

Chapter 7-4

Journals

Chronological record of business events by account

General Journal Records any type of accounting transaction

Special Journals Captures specific types of transactions

Chapter 7-5

Types of Special Journals

Sales Journal Record of credit sales transactions

Purchases Journal Record of credit purchase transactions

Cash Receipts Journal Record of transactions involving receipts of cash

Cash Disbursements Journal Record of transactions involving disbursements of

cash

Chapter 7-6

Ledgers

General Ledger Contains detailed monetary information Includes the assets, liabilities, owners’ equity,

revenues, and expenses of the company

Chart of Accounts Listing of all accounts used by the company Provides organizational structure for the general

ledger Utilizes block coding structure

Chapter 7-7

Trial Balances

Listing of all accounts with the debit and credit balances

Timing of Preparation After all journal entries are posted Following the posting of adjusting entries Following the posting of closing entries

Chapter 7-8

Financial Statements

Primary output of financial accounting system

Main Financial Statements Income Statement Balance Sheet Statement of Owners’ Equity Statement of Cash Flows

Chapter 7-9

Steps in the Accounting Cycle

Chapter 7-10

Coding Systems

Importance of Coding for AISs Record, store, classify, and retrieve information Utilize numeric and alphanumeric codes

Design Considerations Must serve a useful purpose Must be consistent Plan for future expansion

Chapter 7-11

Block Code Example

Chapter 7-12

Which of the following provides the organizational structure for the general ledger?

A. Special Journals

B. A source document

C. General journals

D. The chart of accounts

Study Break #1

Chapter 7-13

Collecting and Reporting Accounting Information

Design Considerations Should be effective Expectations of outputs

Outputs of an AIS Reports to management Reports to investors and creditors Files retaining transaction data Files retaining current data about accounts

Chapter 7-14

Example of a Report

Chapter 7-15

Source Documents

Manage flow of accounting data Dictate type of data collected Encourage completeness of data Distributors of information Establish authenticity of data

Usage today Extensively used in AISs Movement from paper to electronic format

Chapter 7-16

Sample Purchase Order

Chapter 7-17

Sample Sales Invoice

Chapter 7-18

Business Process

Definition Collection of activities Creates value for organization AIS collects and reports data related to processes

Economic event Impacts financial statements

Business event Does not impact financial statements

Chapter 7-19

The Sales Process

Process Begins with customer order Ends with collection of cash

Primary Objectives of Sales Process Process sales in a timely and efficient manner Collect cash in a timely and efficient manner

Chapter 7-20

Objectives of the Sales Process

Tracking sales of goods and/or services to customers

Filling customer orders

Maintaining customer records

Billing customers for goods and services

Collecting payment for goods and services

Forecasting sales and cash receipts

Chapter 7-21

Data Flow Diagram of Sales Process

Chapter 7-22

Inputs to the Sales Process

Sales Order Created at time of sale Used to prepare the sales invoice

Sales Invoice Reflects information of the sale Products purchased, price, terms of payment

Remittance Advice May accompany payment

Chapter 7-23

Inputs to the Sales Process

Shipping Notices Prepared when warehouse releases goods Copy possibly included with goods Additional copy sent to accounts receivable

Debit/Credit Memoranda Denotes return of damaged goods Identifies discrepancies about amount owed

Chapter 7-24

Outputs of the Sales Process

Financial Statements

Customer Billing Statement Summarizes outstanding sales invoices Total amount currently owed

Aging Report Accounts receivable balances Categorized based on time outstanding

Chapter 7-25

Outputs of the Sales Process

Bad Debt Report Information on collection follow-up procedures Helps manage overdue accounts

Cash Receipts Forecast Source documents used as inputs Prior payment experience and aging analysis aid in

preparation

Chapter 7-26

Accounts Receivable Aging Report

Chapter 7-27

Outputs of the Sales Process

Approved Customer Listing Report Identifies customers approved for sales Includes customer information such as billing address,

credit limits, and billing terms

Sales Analysis Reports Detailed information captured by AIS Aid in decision-making process for production

planning and marketing efforts

Chapter 7-28

Sales Process Summary

Chapter 7-29

Study Break #3

________ is (are) a collection of activities or flow of work in an organization that creates value.

A. An economic event

B. Accounting transactions

C. A business process

D. A chart of accounts

Chapter 7-30

The Purchasing Process

Process Begins with request for goods/services Ends with payment of cash

Primary Objectives of Purchasing Process Purchase high-quality goods at best price Pay vendors at the optimal time

Chapter 7-31

Objectives of the Purchasing Process

Tracking purchases of goods and/or services from vendors

Tracking amounts owed

Maintaining vendor records

Controlling inventory

Making timely and accurate vendor payments

Forecasting purchases and cash outflows

Chapter 7-32

Data Flow Diagram of Purchasing Process

Chapter 7-33

Inputs to the Purchasing Process

Purchase Requisition Identifies item requested May indicate name of vendor

Purchase Order Based on Purchase Requisition Includes vendor information

Vendor Invoice Includes prices, shipping terms, and discounts

Chapter 7-34

Inputs to the Purchasing Process

Receiving Report Count and condition of goods received

Bill of Lading Accompanies the good sent Carrier assumes responsibility for the goods

Packing Slip Specific goods and quantities included in shipment Included in merchandise package

Chapter 7-35

Sample Packing Slip

Chapter 7-36

Outputs of the Purchasing Process

Financial Statement Information

Vendor Checks Supported by a voucher Signed by a person designated by management

Check Register List of all checks issued for a particular period By-product of batch processing

Chapter 7-37

Outputs of the Purchasing Process

Discrepancy Reports Notes differences in quantities or amounts Based on reconciliation of purchase order,

receiving report, and the purchase invoice

Cash Requirements Forecast Predicts future payments and payment dates Utilizes multiple source documents

Chapter 7-38

Purchasing Process Summary

Chapter 7-39

IT in Sales and Purchasing

Electronic input Wireless capabilities

Automated data-entry technology Biometrics

Inventory Management Systems RFID Tags

Chapter 7-40

Current Trends in Business Processes

Business Processes Outsourcing (BPO) Business without boundaries Offshoring

Business Process Management Software (BPM) Collect corporate knowledge, data, and business

rules Accomplish business processes more efficiently