ACCOUNTING INFORMATION SYSTEMS

ACTIVITY

Name: ANGA, BREMT CLOYD R.

Course and Year: BSA 2A

Time Schedule: 12:00 – 1:30

Date Submitted: NOVEMBER 18, 2020

PREPARED BY: SIATON, 2020

Explain of each of the following diagram, based on your own understanding and learnings.

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EXPLANATIONS:
The diagram shows the conceptual payroll system or simply the payroll processing. The
diagram emphasizes the importance of labor in business operations by allotting diagram
and discussions. This is due labor is a special-case purchase of an entity instead of the
usual raw materials or finished good for resale.

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In left side of the diagram exhibits various entities that plays an important role in
payroll processing, namely: Personnel department, production department, employee
and bank. The squares with soft edges implicates the general tasks triggered by the
two departments aforementioned.

The personnel department houses the personnel action forms, a document identifying
the employees who are authorized to be granted with paychecks. Moreover, it is a form
utilized to reflect changes in pay rates, payroll deductions, and job classification.
Again, the said form is used to prepare payroll.

The production department plays part in payroll preparation by delivering the time
cards of each employees. Time cards are tools to capture the time the employee is at
work. Mechanical timecards are filled by the employees themselves and inserted into a
machine to be processed by the system either electronically, or manually inclining to
the technology used. Again, the said card is used to prepare payroll.

The production department also prepares the job ticket. It is a mechanism to capture
the time that individual workers spend on each production job, fitted in a form of a
document. The former is used to update the work-in-process (WIP) account, that is
latter sent to update the general ledger. The information being reflected or processed
by the general ledger is the labor distribution summary. Meanwhile, the hours, rate, and
job number (which were sent to update the WIP account) is reflected or consolidated
further in the work in process records.

The hours, rate, withholding from the payroll (Although some of it comes from the
previous departments mentioned) are reflected or consolidated to form the employee
payroll records. Aside from the aforementioned, the main goal of the payroll
preparation, the employee paychecks are made. Again, this is due to the consolidation
of personnel action form and time card which comes from personnel department and
production department respectively. Afterwards, they perform on of the general tasks
which is distributing the paychecks to the employees.

The distributed is an employee check, not the actual physical cash you can readily use
to go to movie after receiving the paycheck. However, the employee paychecks are
presented in the bank. Part of the internal control of the entity is the creation of

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payroll imprest account. This is just an amount set aside to be used to finance current
operations (such as expenditures from payrolls since employees are part of daily
operations).

In the hindsight, there are also processes which needs to be procured before the said
amount is set up in the bank. The preparation of payroll (one of general tasks) yield
three documents. Each document is used to reflect a particular undertaking as
mentioned in previous texts. Here, the information of the payroll register is reflected
in the payroll register. Afterwards, preparation of accounts payable (one of general
tasks) commences. The resulting information from the preparation of accounts payable
are sent to various are reflected to documents (Voucher register) and sent to further
general tasks (Prepare cash disbursement & update general ledger).

The preparation of cash disbursement is made possible from the voucher packet
output from preparation of accounts payable. The preparation of cash disbursement
outputs it payroll check to be sent in the bank, so that the employees can withdraw
the amount corresponding in their paychecks.

The amount and date from the preparation of cash disbursement is reflected in the
check register. Furthermore, the preparation of cash disbursement strenuously gives
feedback to update the general ledger through journal voucher. In updating the
general ledger, it reconciles the three reports from updating the WIP account,
preparation of accounts payable, and preparation of cash disbursement. This is done
to eliminate instances of fraud and strengthen the internal control. Again, updating
the general ledger is one of the general tasks. As all of the general tasks have outputs,
the updating the general ledger is not exemption. Its output in the form of JV posting
detail and Approved Journal Voucher are sent to general ledger and journal voucher
file documents respectively.

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EXPLANATIONS:

The data flow diagram for fixed asset system emphasizes the strenuous procedures in acquiring a fixed
asset due to its high cost, the maintenance of the asset, and the disposal procedures of it. Hence, it can
be an avenue to embezzlement if internal controls are not properly implemented and its processes
unknown or unhewn.

Every diagram starts at a triggering event, in this case is the asset acquisition. Once the desire and the
ability of the entity to acquire a fixed asset is known, it is then processed to following procedures.

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In fixed asset acquisition portion, the use department is tapped that latter yields a purchase requisition
to be sent for authorization. Once the essential personnel signed the purchase approval, the purchase
approval document is used in purchasing activity. It is used to form a purchase order to be sent to
accounts payable, and the other purchase order is sent to the vendor (If they already agreed based on
the quotations given by the vendor).

The purchase order sent to the accounts payable department is processed further to be posted in the
accounts payable subsidiary ledger, to authorize payment in cash disbursement, to be send in fixed
asset accounting posting it in the fixed asset subsidiary ledger, and other is sent to journal voucher for
the general ledger processes. In short, there are four outputs of accounts payable reflected in discrete
accounts and tasks. The accounts payable sent to cash disbursement processing is posted in the check
register and ledger, and the amount disbursed to be sent to the vendor. The accounts payable from the
sent journal voucher is used in general ledger processes to be posted in general ledger of course.

The vendor, after receiving the amount from the cash disbursement processing department, then
prepares suppliers invoice and packing slip. the Suppliers invoice represents the amount paid or the paid
depending on the stipulations made by the cash disbursement department. There can be instances
where the fixed asset is partially paid. Anyways, suppliers invoice is sent directly to accounts payable
department while the packing slip (evidencing the order also) is sent to the receiving department to be
processed and to check if the quotations are matched. Afterwards, it is sent to accounts payable
department.

Again, all what the accounts payable department received are sent to the different departments and
processing activities to be reflected or posted to the proper documents. The texts above exemplify the
strenuous process of acquiring asset.

The other portion of the diagram talks about asset disposal and asset maintenance. In asset disposal,
the user department cannot simply trash a fixed asset. If they can, then they can be used to propel the
selfish and nefarious motives of the agents of the company. Anyways, disposal of a fixed asset requires
a request. When it is authorized, disposal approval is procured to be used in processing the disposal.
Following to that, a disposal report is formed to be processed in fixed asset accounting, and to be posted
in the fixed asset subsidiary ledger.

In the other side is the asset maintenance. This is done to prolong and preserve the fixed asset in the
entity. If ever there are asset changes, it is sent to the fixed asset accounting to be processed and
reflected in the fixed asset subsidiary ledger. Depreciation is also an asset changes. But, in order to
reflect the change in the value of asset a report or proper document is made such as depreciation
schedule.

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PREPARED BY: SIATON, 2020