Transcript AIS PowerPoint Presentations

Core Concepts of
ACCOUNTING INFORMATION SYSTEMS
Moscove, Simkin & Bagranoff
Developed by:
Marianne Bradford, Ph.D.
Bryant College
John Wiley & Sons, Inc.
Chapter 4
Transaction Processing: Fundamentals and
Major Processing Cycles
• Introduction
• Transaction Processing Fundamentals
• Collecting and Reporting Accounting
Information
• Transaction Processing Cycles
Introduction
• AISs depend on the flow of data through
various organizational subsystems.
• Effective transaction processing systems ensure
capture of appropriate data and
accurate information reporting.
• Transaction processing cycles organize
transactions related to an
organization’s business processes.
Transaction Processing
Fundamentals
• The accounting cycle begins when
accounting personnel analyze a
transaction from a source document.
• A source document is a piece of paper or
electronic form that records a business
activity such as the purchase or sale of
goods.
Journals
• Accounting personnel record transactions in a journal.
• The journal is a chronological record of business events
by account.
• A journal may be a general journal or a special journal.
– A general journal allows any type of accounting
transaction to be recorded.
– A special journal captures specific types
of transactions.
Ledgers
• A ledger may be a general ledger or a
subsidiary ledger.
– A general ledger is a collection of detailed monetary
information about an organization’s assets,
liabilities, revenues, and expenses.
– A subsidiary ledger contains detailed records
pertaining to a particular account in
the general ledger.
Trial Balances
• Once an AIS records journal entries and posts them
to the general ledger, the system can create a trial
balance.
• Three end of period trial balances are needed:
– A preadjusting trial balance after all entries have
been posted;
– An adjusted trial balance after adjustments have
been recorded and posted;
– A postclosing trial balance after temporary
accounts have closing entries have been recorded
and posted.
Financial Statements
• Financial statements are the primary
output of a financial accounting system.
• These statements include:
–
–
–
–
Income Statement
Statement of Owners Equity
Balance Sheet
Statement of Cash Flows
Coding Systems
•
•
•
AISs depend on coding to record, store,
classify and retrieve financial data.
Computer systems most often use numeric or
alphanumeric codes for processing accounting
transactions.
Purposes of coding:
1. Uniquely identify transactions
and accounts
2. Compress data
3. Aid in classification process
4. Convey special meanings
Types of Codes
• Mnemonic Codes give visible clues concerning the
objects they represent.
• Sequence Codes assign numbers or letters in
consecutive order.
• Block Codes are sequential codes in which specific
blocks of numbers are reserved for particular uses.
• Group Codes reveal two or more
dimensions or facets pertaining to
an object.
Design Considerations
in Coding
• Codes should serve some useful purpose.
• Codes should be consistent.
• Codes should be standardized throughout
the organization.
• Codes should plan for future
expansion.
Collecting and Reporting
Accounting Information
•
•
Design of an effective AIS begins by
considering outputs from the system.
Outputs of an AIS include:
1.
2.
3.
4.
reports to management
reports to investors and creditors
files that retain transaction data
files that retain current
data about accounts
Considerations in
Report Design
• Reports that only list exceptional conditions are
exception reports.
• Reports should be useful to managerial
decision-making without creating information
overload.
• Format should be convenient, contain
fundamental identification, and
be consistent.
Transaction Processing
Cycles
• An AIS consists of one or more
transaction processing cycles or
applications.
• These cycles group transactions related to
an organization’s business processes.
• The objective of grouping like
transactions is to simplify
information processing.
The Revenue Cycle
• The revenue cycle begins with a customer order
for goods or services and ends with the
collection of cash from the customer.
• The primary objective is to achieve
timely and efficient revenue collection.
• An organization that generates revenues,
but fails to collect these revenues on a timely
basis, may find itself in a position where it
cannot pay its bills.
Objectives of the Revenue
Cycle
• Tracking sales of goods and/or services to
customers.
• Filling customer orders.
• Billing customers for goods and services
• Collecting payment for goods and
services.
• Forecasting sales and cash receipts.
Inputs to the Revenue Cycle
• Sales Order - prenumbered and usually prepared in
multiple copies; used to prepare sales invoice
• Sales Invoice - prepared after shipment of goods or
providing of a service
• Remittance Advice - serve as source document for
credits to accounts receivable
• Shipping Notice - warehouse prepares after goods are
released for shipment
• Debit/Credit memo - issued for sales returns and
allowances; debit memos increase amount customer
owes
Outputs of the Revenue Cycle
• Financial Statement Information
• Customer Billing Statement - includes
customer account activity such as sales,
returns, and cash receipts
• Accounts Receivable Aging Report - contains
data concerning the status of open
balances of all active credit
customers arranging the overdue
amounts by time periods
Outputs of the Revenue Cycle
• Bad Debt Report - customer accounts written off.
• Cash Receipts Forecast - all data gathered from
source documents in revenue transactions are
inputs to this forecast.
• Customer Listing - shows customer codes, contacts,
shipping and billing addresses, credit limits, and
billing terms.
• Sales Analysis Reports - captures detailed data
about each sale in order to monitor sales activities
and plan production and marketing efforts.
The Purchasing Cycle
• The purchasing cycle begins with a
request for goods or services and ends
with the payment of cash to the vendor.
• Purchase may be for either goods
or services and for cash or on
credit.
Objectives of the Purchasing
Cycle
• 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
Inputs to the
Purchasing Cycle
• Purchase Requisition - shows items requested by stores
and may indicate the name of the vendor
• Purchase Order - based on purchase requisition but also
includes vendor information and payment terms
• Vendor Invoice - includes items shipped by vendors,
prices, shipping terms and discounts provided
• Receiving Report - reflects the count and condition of
received goods
• Bill of lading – accompanies the goods sent
• Packing slip – included in the merchandise package
• Debit/Credit Memoranda - debits or credits accounts
payable
Outputs of the
Purchasing Cycle
• Financial Statement Information
• Vendor Checks - should be supported by a voucher
and signed by a person designated by management
• Check Register - lists all checks issued for a
particular period
• Discrepancy Reports - used to identify any
differences among quantities on the purchase order,
receiving report, and vendor invoice
• Cash Requirements Forecast - predicts future
payments and payment dates by reference to
outstanding purchase order, unbilled receiving
reports and vendor invoices
The Resource
Management Cycle
• Organizations use resources to produce
goods or services sold to generate
revenues.
• Two other resources besides
inventory requiring attention
by an AIS are human resources
and fixed assets.
Human Resource
Management
• An organization’s human resource
management activity includes the personnel
function and the payroll function.
• The personnel function is responsible
for hiring employees and maintaining
personnel records.
• The payroll function is responsible
for maintaining the accounting
records related to employee
remuneration.
Objectives of Human
Resource Management
• 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
• Providing an interface for
personnel and payroll activities
Inputs to Human
Resource Management
• Personnel Action Forms - document the hiring of
new employees or changes in employee status
• Time Sheets - used to track hours worked
• Payroll Deduction Forms - authorize the payroll
system to deduct amounts from gross pay for
items such as retirement, insurance, or union dues
• Tax Withholding Forms - authorize payroll to
reduce gross pay by the appropriate withholding
tax.
Outputs of Human
Resource Management
• Financial Statement Information
• Employee Listings - shows current employees and
may contain address and other demographic
information
• Paychecks - the final documents in the process;
subject to strict internal controls
• Check Registers - used to make journal entries for
salary and payroll tax expenses
Outputs of Human
Resource Management
• Deduction Reports - contain summaries of
deductions for employees as a group
• Tax (Regulatory) Reports - reports the
government requires for income tax, social
security tax, and unemployment tax
information
• Payroll Summaries - used by
management in analyzing
expenses
Fixed Asset Management
• Fixed assets are assets with usable lives of
more than one year.
• The objective of a fixed-asset
management system is to manage the
purchase, maintenance, valuation
and disposal of an organization’s
fixed assets.
Objectives of Fixed Asset
Management
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•
•
•
Tracking purchases of fixed assets
Recording fixed asset maintenance
Valuing fixed assets
Allocating fixed asset costs
(recording depreciation)
• Tracking fixed asset disposals
Inputs to Fixed Asset
Management
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Purchase Requisition
Receiving Reports
Supplier Invoices
Construction Work Orders - if the company
builds the asset
• Repairs and Maintenance Reports - notifies a
company’s AIS to update expense or asset
accounts for repairs and maintenance
• Fixed Asset Change Forms - used as the basis
for transferring fixed assets from one location
to another, retiring, selling or trading-in fixed
assets
Outputs of Fixed Asset
Management
• Financial Statement Information
• Fixed Asset Register - lists identification numbers
for each fixed asset and each assets location
• Depreciation Register - shows depreciation expense
and accumulated depreciation for each fixed asset
• Repair and Maintenance Reports - show the
current period’s repair and maintenance expenses
as well as each fixed asset’s repair and
maintenance history
• Retired Assets Report - shows all assets
disposed of during the accounting period
Copyright
Copyright 2001 John Wiley & Sons, Inc. All rights reserved.
Reproduction or translation of this work beyond that permitted in
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the use of the information contained herein.
Chapter 4