1. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-1 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.

2. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-2 key terms conversion cycle expenditure cycle financial cycle organisational structure payroll cycle revenue cycle transaction cycles

3. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-3 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.

4. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-4 Business activities Accounting information systems must capture all the economic events or business activities of an organisation. For example: capital investment purchases production sales

5. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-5 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

6. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-6 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

7. © 2003 McGraw-Hill Australia Pty Ltd, PPTs t/a Accounting Information & Reporting Systems by A. Aseervatham and D. Anandarajah. Slides prepared by Kaye Watson. 11-7 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