Chapter 7

ACCOUNTING INFORMATION SYSTE

MS AND BUSINESS PROCESSES: PA
RT I

Chapter
7-1
 Chapter 7:
Accounting Information Systems
and Business Processes - Part I

Introduction
Business Process Fundamentals
Collecting and Reporting Accounting Inform
ation
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 ac

count
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 ca
sh
Chapter
7-5
 Ledgers

General Ledger
 Contains detailed monetary information
 Includes the assets, liabilities, owners’ equity, rev
enues, 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 cred

it 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 syste

m

• 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
Block Code Example

Chapter
7-11
 Study Break #1

Which of the following provides the organizational structure fo

r the general ledger?

A. Special Journals
B. A source document
C. General journals
D. The chart of accounts

Chapter
7-12
Collecting and Reporting Acc
ounting 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
7-13
Example of a Report

Chapter
7-14
 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
7-15
Sample Purchase Order

Chapter
7-16
Sample Sales Invoice

Chapter
7-17
 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
7-18
 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
7-19
Objectives of the Sales Proce
ss
Tracking sales of goods and/or services to custome
rs
Filling customer orders
Maintaining customer records
Billing customers for goods and services
Collecting payment for goods and services
Forecasting sales and cash receipts

Chapter
7-20
Data Flow Diagram of Sales P
rocess

Chapter
7-21
 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
7-22
 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
7-23
 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
7-24
 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 pre
paration

Chapter
7-25
Accounts Receivable Aging R
eport

Chapter
7-26
 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 plannin
g and marketing efforts
Chapter
7-27
Sales Process Summary

Chapter
7-28
 Study Break #3

________ is (are) a collection of activities or flow of work i

n an organization that creates value.

A. An economic event
B. Accounting transactions
C. A business process
D. A chart of accounts

Chapter
7-29
 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
7-30
Objectives of the Purchasing Proc
ess

Tracking purchases of goods and/or services fro

m vendors
Tracking amounts owed
Maintaining vendor records
Controlling inventory
Making timely and accurate vendor payments
Forecasting purchases and cash outflows

Chapter
7-31
Data Flow Diagram of Purcha
sing Process

Chapter
7-32
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
7-33
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
7-34
Sample Packing Slip

Chapter
7-35
 Outputs of the Purchasing Pr
ocess

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
7-36
Outputs of the Purchasing Pr
ocess

Discrepancy Reports
 Notes differences in quantities or amounts
 Based on reconciliation of purchase order, receivi
ng report, and the purchase invoice

Cash Requirements Forecast

 Predicts future payments and payment dates
 Utilizes multiple source documents

Chapter
7-37
Purchasing Process Summary

Chapter
7-38
 IT in Sales and Purchasing

Electronic input
 Wireless capabilities

Automated data-entry technology

 Biometrics

Inventory Management Systems

 RFID Tags

Chapter
7-39
Current Trends in Business Pr
ocesses

Business Processes Outsourcing (BPO)

 Business without boundaries
 Offshoring

Business Process Management Software (BP

M)
 Collect corporate knowledge, data, and business
rules
 Accomplish business processes more efficiently
Chapter
7-40
T H A N K Y O U !!

Chapter
7-41