Accounting information systems 12th SIMKIN and norman chapter 07

Types of Special JournalsSales Journal  Record of credit sales transactions Purchases Journal  Record of credit purchase transactions Cash Receipts Journal  Record of transactions inv

Chapter 7:

Accounting Information Systems and Business Processes - Part I

Introduction

Business Process Fundamentals

Collecting and Reporting Accounting

Information

The Sales Process

The Purchasing Process

Business Process Fundamentals

Overview of the Financial Accounting Cycle

 Journals

 Ledgers

 Trial Balances

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

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

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

Steps in the Accounting Cycle

Coding Systems

Importance of Coding for AISs

 Record, store, classify, and retrieve information

 Utilize numeric and alphanumeric codes

Block Code Example

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

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

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?

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?

Collecting and Reporting

 Reports to investors and creditors

 Files retaining transaction data

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

Example of a Report

Source Documents

Manage flow of accounting data

 Dictate type of data collected

 Encourage completeness of data

Sample Purchase Order

Sample Sales Invoice

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

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

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

Data Flow Diagram of Sales

Process

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

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

Outputs of the Sales Process

Financial Statements

Customer Billing Statement

 Summarizes outstanding sales invoices

 Total amount currently owed

Aging Report

Accounts receivable balances

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

Accounts Receivable Aging

Report

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

Sales Process Summary

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

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

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

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

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

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

Data Flow Diagram of

Purchasing Process

Inputs to the Purchasing Process

Purchase Requisition

 Identifies item requested

 May indicate name of vendor

Purchase Order

 Based on Purchase Requisition

 Includes vendor information

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

Sample Packing Slip

Outputs of the Purchasing

 List of all checks issued for a particular period

 By-product of batch processing

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

Purchasing Process Summary

IT in Sales and Purchasing

Current Trends in Business

Processes

Business Processes Outsourcing (BPO)

 Business without boundaries

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Chapter 7