© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson chapter 11 Accounting transaction cycles Learning objectives –To understand the cycle of basic business activities and know its components. –To learn what a transaction cycle is and how many transaction cycles there are. –To learn to match an economic activity with a transaction cycle. –To know the advantages of using transaction cycles. –To understand how the accounting information system works.

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson key terms conversion cycle expenditure cycle financial cycle organisational structure payroll cycle revenue cycle transaction cycles

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson The structure of an organisation Organisations can be subdivided into divisions and departments based on the activities carried out by each group. This is the organisational structure.

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson Business activities Accounting information systems must capture all the economic events or business activities of an organisation. For example: capital investment purchases production sales

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson Transaction cycles A set of transactions that occur in a related sequence is a transaction cycle Transactions can be divided into a number of groups. For example: financial cycle expenditure cycle payroll cycle conversion cycle revenue cycle

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson Transaction cycles Financial cycle: –consists of those accounting transactions that relate to obtaining capital from owners and lenders –covers the acquisition and use of capital assets Expenditure cycle: –mainly consists of the transactions relating to the acquisition of raw materials for production and goods for resale

© 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson Transaction cycles Payroll cycle: –consists of transactions involved in the payment of salaries and wages to employees of the organisation Conversion cycle: –contains those transactions involved in converting the raw materials into finished products by the application of labour and overheads Revenue cycle: –contains accounting transactions that involve the generation of revenue from the outputs of the conversion process