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Chapter 7-1 Chapter 7: 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 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 account 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 cash Chapter 7-5 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 Chapter 7-6 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 Chapter 7-7 Financial Statements Primary output of financial accounting system 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 for the general ledger? A. Special Journals B. A source document C. General journals D. The chart of accounts Chapter 7-12 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 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 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 Chapter 7-20 Data Flow Diagram of Sales Process 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 preparation Chapter 7-25 Accounts Receivable Aging Report 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 planning 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 in 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 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 Chapter 7-31 Data Flow Diagram of Purchasing 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 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 Chapter 7-36 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 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 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 Chapter 7-40
