1. Accounting Information Systems and Business Processes - Part I
Chapter 10

2. Chapter 10: Accounting Information Systems and Business Processes - Part I
Introduction
Business Process Fundamentals
Collecting and Reporting Accounting Information
The Sales Process
The Purchasing Process
Current Trends in Business Processes 2

3. Business Process Fundamentals
Overview of the Financial Accounting Cycle
Journals
Ledgers
Trial Balances
Financial Statements

4. Journals Chronological record of business events by account
General Journal
Records any type of accounting transaction
Special Journals
Captures specific types of transactions

5. 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 cash

6. Ledgers General Ledger Contains detailed monetary information
Includes the assets, liabilities, owners’ equity, revenues, 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

7. Trial Balances
Listing of all accounts with the debit and credit balances
Timing of Preparation
After all journal entries are posted
Following the posting of adjusting entries
Following the posting of closing entries

8. Financial Statements Primary output of financial accounting system
Main Financial Statements
Income Statement
Balance Sheet
Statement of Owners’ Equity
Statement of Cash Flows

9. Steps in the Accounting Cycle

10. Coding Systems Importance of Coding for AISs Design Considerations
Record, classify, store, and retrieve information
Utilize numeric and alphanumeric codes
Design Considerations
Must serve a useful purpose
Must be consistent
Plan for future expansion

11. Types of Codes Mnemonic Codes Sequence Codes Block Codes Group Codes
Helps user remember what they represent
Sequence Codes
Sequential set of numbers
Block Codes
Sequential codes
Blocks of numbers reserved for specific
Group Codes
Combine two or more subcodes

12. Block Code Example

13. Study Break #1
Which of the following provides the organizational structure for the general ledger?
Special Journals
A source document
General journals
D. The chart of accounts

14. Study Break #2
AISs depend on codes to record, classify, store, and retrieve financial data. Which of the following codes is a group of numbers reserved for particular uses?
Block codes
Mnemonic codes
Alphanumeric codes
D. Numeric codes

15. Collecting and Reporting Accounting 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

16. Designing Reports Characteristics of Good Reports
Useful and convenient format
Easy to identify and consistent
Identification and Consistency
Include headings, page numbers, and dates
Emphasize consistency
Over time
Across departmental or divisional levels
With general accounting practice

17. Example of a Report

18. Source Documents Manage flow of accounting data Usage today
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

19. Sample Purchase Order

20. Sample Sales Invoice

21. Business Process Definition Economic event Business event
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

22. The Sales Process Process Primary Objectives of Sales 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

23. Objectives of the Sales Process
Tracking sales of goods and/or services to customers
Filling customer orders
Maintaining customer records
Billing customers for goods and services
Collecting payment for goods and services
Forecasting sales and cash receipts

24. Data Flow Diagram of Sales Process

25. 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

26. 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

27. 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

28. 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 preparation

29. Accounts Receivable Aging Report

30. 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 planning and marketing efforts

31. Sales Process Summary

32. Study Break #3
________ is (are) a collection of activities or flow of work in an organization that creates value.
An economic event
Accounting transactions
A business process
A chart of accounts

33. Study Break #4
Which of the following is NOT an objective of the sales process?
Controlling inventory
Tracking sales of goods and/or services to customers
Billing for goods and services
Forecasting sales and cash receipts

34. The Purchasing 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

35. Objectives of the Purchasing Process
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

36. Data Flow Diagram of Purchasing Process

37. 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

38. Inputs to the Purchasing Process
Receiving Report
Count and condition of goods received
Bill of Lading
Accompanies the goods sent
Carrier assumes responsibility for the goods
Packing Slip
Specific goods and quantities included in shipment
Included in merchandise package

39. Sample Packing Slip

40. Outputs of the Purchasing Process
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

41. Outputs of the Purchasing Process
Discrepancy Reports
Notes differences in quantities or amounts
Based on reconciliation of purchase order, receiving report, and the purchase invoice
Cash Requirements Forecast
Predicts future payments and payment dates
Utilizes multiple source documents

42. Purchasing Process Summary

43. IT in Sales and Purchasing
Electronic input
Wireless capabilities
Automated data-entry technology
Bar code readers
Inventory Management Systems
RFID tags

44. Current Trends in Business Processes
Business Processes Outsourcing (BPO)
Business without boundaries
Offshoring
Business Process Management Software (BPM)
Collect corporate knowledge, data, and business rules
Accomplish business processes more efficiently