Accounting information systems 12th SIMKIN and norman chapter 08

Chapter 8-1Chapter 8: Accounting Information Systems and Business Processes - Part II Introduction The Resource Management Process The Production Process The Financing Process Business

Chapter 8-1

Chapter 8:

Accounting Information Systems and Business

Processes - Part II

Introduction

The Resource Management Process

The Production Process

The Financing Process

Business Processes In Special Industries

Business Processes Reengineering

Business Processes

 Sales and Purchasing

 Resource Management, Production, and Financing

Information Needs

 Typical AIS requirements

Chapter 8-3

 Automate the core processes

Payroll Processing Information Systems

 Process payroll activities and reporting

Human Resource Management Objectives

Hiring, training, and employing workers

Maintaining employee earnings records

Complying with regulatory reporting requirements

Reporting on payroll deductions

Making timely and accurate payments to

employees

Chapter 8-5

Personnel Function Flowchart

Payroll Function Flowchart

Chapter 8-7

Human Resource Management Inputs

Personnel Action Forms

 Documents hiring or changes in employee status

Time Sheets

 Tracks hours worked

Payroll Deduction Authorizations

 Authorization to deduct certain amounts

Tax Withholding Forms

 Authorization to withhold appropriate tax amounts

Financial Statement Information

Chapter 8-9

Human Resource Management Outputs

 Government required information

 Income tax, social security tax, unemployment tax

Human Resource

Management Summary

Chapter 8-11

All of the following activities are common to the Human

Resource Management function except:

A Hiring, training, and employing workers

B Reporting on payroll deductions

C Maintaining employee earnings records

D Certified financial planning for employees

Study Break #1

All of the following activities are common to the Human

Resource Management function except:

A Hiring, training, and employing workers

B Reporting on payroll deductions

C Maintaining employee earnings records

D Certified financial planning for employees

Study Break #1 - Answer

Chapter 8-13

Fixed Asset Management

Fixed Asset Management Function

 Long-term Assets

 Purchase, maintenance, valuation, disposal

Enterprise Asset Management System

 Automate management of assets

Fixed Asset Management

Objectives

Tracking purchases of fixed assets

Recording fixed asset maintenance

Valuing fixed assets

Allocating fixed asset costs (recording depreciation) Tracking disposal of fixed assets

Chapter 8-15

Fixed Asset Management Function

Flowchart

Fixed Asset Management

Chapter 8-17

Fixed Asset Management

Inputs

Construction Work Order

 If asset is built by company

Fixed Asset Change Form

 Transfer of fixed asset

 Locations, sale, trade, or retirement

Repair and Maintenance Form

 Notification to update expense and asset accounts

Fixed Asset Management

Outputs

Financial Statement Information

Fixed Asset Register

 Identification numbers

 Location

Depreciation Register

Chapter 8-19

Fixed Asset Management

Outputs

Repair and Maintenance Reports

 Current period expenses

 Historical expenses

Report on Retired Assets

 Disposal of fixed assets

Fixed Asset Management

Summary

Chapter 8-21

What is the objective of the fixed asset management function?

A To track purchases of fixed assets

B To manage the purchase, management, valuation, and

disposal of an organization’s fixed assets

C To record maintenance and depreciation of fixed assets

D To keep a current listing of approved vendors

Study Break #2

What is the objective of the fixed asset management function?

A To track purchases of fixed assets

B To manage the purchase, management, valuation, and

disposal of an organization’s fixed assets

C To record maintenance and depreciation of fixed assets

D To keep a current listing of approved vendors

Study Break #2 - Answer

Chapter 8-23

Why do companies use BPM solutions for the fixed asset

management function?

A Decrease machine downtime and maintenance costs

B Reduce inventory

C Integrate data and coordinate logistics

D All of the above

Study Break #3

Why do companies use BPM solutions for the fixed asset

management function?

A Decrease machine downtime and maintenance costs

B Reduce inventory

C Integrate data and coordinate logistics

D All of the above

Study Break #3 - Answer

Chapter 8-25

The Production Process

Process

 Begins with request for raw materials

 Ends with transfer of finished goods to warehouses

Primary Objectives

 Converting raw materials to finished goods efficiently

 Collecting and reporting of information

Production Process Flowchart

Chapter 8-27

Production Process Objectives

Track purchases and sales of inventories

Monitor and control manufacturing costs

Control inventory

Control and coordinate the production process

Provide input for budgets

Cost Accounting Subsystem

Job Costing Information System

 Tracks costs for specific “jobs”

 Raw materials, labor, and overhead

Process Costing Information System

 Used for manufacturers of homogeneous products

 Produced on a regular and continuous basis

Chapter 8-29

Just-in-Time Inventory

Systems

A make-to-order inventory system

Attempts to minimize inventory at all levels

Dependent upon AIS

 Timely and accurate processing of information

 Ensure continuous work flow by providing

adequate raw materials

Lean Production/

Manufacturing

Concept

 Eliminate waste throughout the organization

 Focus on reduction of non-value-added waste

Lean Accounting

 Necessary in order to have lean manufacturing

 Data collection

Chapter 8-31

Non-Value-Added Waste

Production Process Inputs

Material Requisition Form

 Request to acquire materials from storeroom or

warehouse

Bill of Materials

 Identifies types and quantities of parts needed

Master Production Schedule

Chapter 8-33

Production Order

 Authorizes the manufacture of goods

 Incorporates data from sales projections and inventory

levels

 Dictates the production schedule

Job Time Card

 Identifies the distribution of labor costs to specific jobs

or production orders

Production Process Inputs

Production Process Outputs

Financial Statement Information

 Details of the costs and pricing

Materials Price List

 Prices charged for raw materials

Periodic Usage Report

 Provides information on use of raw materials

Chapter 8-35

Production Process Outputs

Inventory Status Report

 Allows managers to monitor inventory levels

Production Cost Report

 Details the actual costs for production items

 Production operation, cost element, and/or separate jobs

Manufacturing Status Report

 Provides information about the status of various jobs

Production Process

Summary

Chapter 8-37

Which of the following automated systems help minimize

inventory costs?

A JIT systems

B ABC systems

C Job order costing systems

D Process costing systems

Study Break #4

Which of the following automated systems help minimize

inventory costs?

A JIT systems

B ABC systems

C Job order costing systems

D Process costing systems

Study Break #4 - Answer

Chapter 8-39

Lean accounting is:

A An AIS that is generally considered low cost (i.e., an level system)

entry-B Designed to support traditional financial performance

measures

C New performance measures that support decision-making

by managers and operational improvement leaders

D None of these

Study Break #5

Lean accounting is:

A An AIS that is generally considered low cost (i.e., an level system)

entry-B Designed to support traditional financial performance

measures

C New performance measures that support decision-making

Study Break #5 - Answer

Chapter 8-41

The Financing Process

Process

 How a company acquires and uses financial resources

 Cash, other liquid assets, investments

Acquisition

 Sales of goods and services

 Borrowing cash or selling ownership shares

The Financing Process

Chapter 8-43

Financing Process Objectives

Effective cash management

 Lockbox systems and electronic funds transfer

Cost of capital optimization

Earn maximum return on investments

Project cash flows

Benefits of a Lockbox System

Chapter 8-45

Financing Process Inputs

Financing Process Outputs

Financial Statement Information

Cash Budget

Investment Reports

Debt and Interest Reports

Financial Ratios

Chapter 8-47

Financing Process Summary

Business Processes in

Special Industries

Professional Service Organizations

 Accounting, Law, Engineering, Consulting

 Utilize time and billing information systems

 Tracks billable hours and creates client bill

Not-for-Profit Organizations

 Provide services for the betterment of society

 Emphasize fund accounting systems

Chapter 8-49

Professional Service

Organization Bill

Business Processes in

Special Industries

Health Care Organizations

 Provide health care to patients

 Emphasize third-party billing

 Standardized codes provide efficiency in billing

 Rely on AIS to maintain patient information

Chapter 8-51

Mini-based Hospital System

Business Process Reengineering

Purpose

 Inefficient or ineffective processes exist

 Redesign to improve efficiency and effectiveness

Potential Failure of Reengineering

 Unrealistic expectations

Chapter 8-53

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Chapter 8