chapter 7-1 chapter 7: accounting information systems and business processes - part i introduction...
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Chapter 7-1
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 7-2
Business Process Fundamentals
Overview of the Financial Accounting Cycle Journals
Ledgers
Trial Balances
Financial Statements
Chapter 7-3
Journals
Chronological record of business events by account
General Journal Records any type of accounting transaction
Special Journals Captures specific types of transactions
Chapter 7-4
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 7-5
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 7-6
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 7-7
Financial Statements
Primary output of financial accounting system
Main Financial Statements Income Statement Balance Sheet Statement of Owners’ Equity Statement of Cash Flows
Chapter 7-8
Steps in the Accounting Cycle
Chapter 7-9
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 7-10
Types of Codes
Mnemonic Codes Helps user remember what they represent
Sequence Codes Sequential set of numbers
Block Codes Sequential codes Blocks of numbers reserved for specific
Group Codes Combine two or more subcodes
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
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 - Answer
Chapter 7-14
AISs depend on codes to record, classify, store, and retrieve financial data. Which of the following codes is a group of numbers reserved for particular uses?
A. Block codes
B. Mnemonic codes
C. Alphanumeric codes
D. Numeric codes
Study Break #2
Chapter 7-15
AISs depend on codes to record, classify, store, and retrieve financial data. Which of the following codes is a group of numbers reserved for particular uses?
A. Block codes
B. Mnemonic codes
C. Alphanumeric codes
D. Numeric codes
Study Break #2
Chapter 7-16
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 7-17
Designing Reports
Characteristics of Good Reports Useful and convenient format Easy to identify and consistent
Identification and Consistency Include headings, page numbers, and dates Emphasize consistency
Over time Across departmental or divisional levels With general accounting practice
Chapter 7-18
Example of a Report
Chapter 7-19
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 7-20
Sample Purchase Order
Chapter 7-21
Sample Sales Invoice
Chapter 7-22
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 7-23
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 7-24
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 7-25
Data Flow Diagram of Sales Process
Chapter 7-26
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 7-27
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 7-28
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 7-29
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 7-30
Accounts Receivable Aging Report
Chapter 7-31
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 7-32
Sales Process Summary
Chapter 7-33
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 7-34
Study Break #3 - Answer
________ 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 7-35
Study Break #4
Which of the following is NOT an objective of the sales process?
A. Controlling inventory
B. Tracking sales of goods and/or services to customers
C. Billing for goods and services
D. Forecasting sales and cash receipts
Chapter 7-36
Study Break #4
Which of the following is NOT an objective of the sales process?
A. Controlling inventory
B. Tracking sales of goods and/or services to customers
C. Billing for goods and services
D. Forecasting sales and cash receipts
Chapter 7-37
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 7-38
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 7-39
Data Flow Diagram of Purchasing Process
Chapter 7-40
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 7-41
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 7-42
Sample Packing Slip
Chapter 7-43
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 7-44
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 7-45
Purchasing Process Summary
Chapter 7-46
IT in Sales and Purchasing
Electronic input Wireless capabilities
Automated data-entry technology Biometrics
Inventory Management Systems RFID Tags
Chapter 7-47
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
Chapter 7-48
Copyright
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Chapter 7-49
Chapter 7