Presentation on theme: "ACCOUNTING INFORMATION SYSTEMS"— Presentation transcript:
1 ACCOUNTING INFORMATION SYSTEMS Core Concepts ofACCOUNTING INFORMATION SYSTEMSMoscove, Simkin & BagranoffDeveloped by:Marianne Bradford, Ph.D.Bryant CollegeJohn Wiley & Sons, Inc.
2 Chapter 5 Transaction Processing: Additional Cycles, Special Industries, and Accounting Software IntroductionAdditional Transaction Processing CyclesTransaction Processing in Special IndustriesAccounting and Enterprise SoftwareBusiness Process Reengineering
3 IntroductionMany organizations have specialized information needs, apart from the typical AIS requirements.The focus of AISs is moving from transaction processing to capturing data around business processes.Two important transaction processing cycles common to many organizational entities are the production and financing cycles.
4 The Production CycleThe production cycle begins with a request for raw material and ends with the transfer of finished goods to warehouses.This cycle concerns the capture of data and the reporting of information associated with producing goods in manufacturing organizations.
5 Objectives of the Production Cycle Track purchases and sales of inventoriesMonitor and control manufacturing costsControl inventoryControl and coordinate the production processProvide input for budgets
6 Cost Accounting Subsystem Provides important control information for the budget process.Can be characterized as job costing or process costing systems.A job costing information system keeps track of costs for each product or group of products, called a job.Process costing systems make use of averages to calculate the costs associated with goods in process and finished goods produced.
7 Just-in-Time (JIT) Inventory Systems Inventory control ensures that the production cycle processes inventory transactions appropriately so that the financial statements correctly state the value of the inventory and cost of goods sold accounts.The objective of JIT is to minimize inventories at all levels.The production AIS may be integrated with a computer integrated manufacturing (CIM) system.
8 Inputs to the Production Cycle Material Requisition Form - directs stores to issue materials or parts to designated work centers or authorized personsBill of Materials - shows the types and quantities of parts needed to make a single unit of productMaster Production Schedule - shows the quantities of goods needed to meet sales demands
9 Inputs to the Product Conversion Cycle Production order - incorporates data from sales orders or forecasts, operations lists and bills of materials in order to authorize the production of an order or batchJob Time Card - shows the distribution of labor costs to specific jobs or production orders
10 MRPMaterial requirements planning (MRP I) system monitors the acquisition and use of parts and subassemblies.Manufacturing resource planning (MRP II) is a more complex version of MRP II which uses the information from the bill of materials and production schedule to coordinate the purchase and use of raw material inventories.
11 Outputs of the Product Conversion Cycle Financial Statement InformationMaterials Price Lists - shows prices charged for raw materialsPeriodic Usage Reports - provides managerial information about how various production departments are using raw materialsInventory Reconciliation Reports - reconciles physical inventory with perpetual records
12 Outputs of the Product Conversion Cycle Inventory Status Reports - allows purchasing and production managers to monitor inventory levelsProduction Cost Reports - details the actual costs for each production operation, each cost element, and/or each separate jobManufacturing Status Reports - provide managers with information about the status of various jobs
13 The Financing CycleThe financing process is where a company gets and uses financial resources, such as cash, other liquid assets and investments.The financing cycle includes the activities of borrowing cash or selling ownership shares.
14 Objectives of the Financing Cycle Effective cash management – organizations can make use of lockbox systems and electronic funds transfer (EFT).Minimizing cost of capital, or the cost of obtaining financial resources.Earn maximum return on investments by using financial planning models.Project cash flows
15 Inputs to the Financing Cycle Remittance Advices - accompanies a customer’s paymentDeposit Slips - banks provide to document account depositsChecks - companies receive and issue checksBank Statements - used to reconcile the cash balance in the company’s ledger against the cash balance in the bank accountStock Market DataInterest DataFinancial Institution Profiles
16 Outputs of the Financing Cycle Financial Statement InformationCash BudgetInvestment ReportsDebt and Interest ReportsFinancial RatiosFinancial Planning Model Reports
17 Transaction Processing in Special Industries Vertical market refers to markets or industries that are distinct in terms of the services they provide or the goods they produce.These organizations may require more information than is typically output from a traditional AIS.Examples of specialized information needs include time and billing systems, activity based costing systems, and point-of-sale systems.
18 Industries with Specialized AISs Professional serviceNot-for-profitHealth careRetailConstructionGovernmentBanking and Financial servicesHospitality
19 Accounting and Enterprise Software Most companies purchase accounting and enterprise software.Another option is to “e-source” the software by buying the services of an application service provider (ASP).Integrated accounting software programs process all types of accounting transactions.Packages today include Internet connectivity and enable small businesses to create Web sites and engage in electronic commerce.Middle to high-end accounting software packages are typically sold by a value-added reseller (VAR).
20 Enterprise-wide Accounting Software Solutions Enterprise resource planning (ERP) systems are integrated programs do much more than process financial data.The capabilities of accounting software programs to process enterprise-wide data expand with the price and complexity of software.A valued feature of ERPs is the ability to interface with customers and suppliers. This is termed supply chain management.
21 Specialized Accounting Software Accounting software has become more sophisticated and customized for specific industry information needs.Specialized accounting software may include:Customer relationship management to keep track of sales calls, seminars, and phone calls with prospective clientsSource code that may be customized to fit a particular firm’s needs.
22 Business Process Reengineering Today, AISs are less concerned with accounting transactions and more concerned with business events.Business events include important activities that affect the business but are not captured by the financial accounting system.Business process reengineering (BPR) concerns redesigning business processes from scratch.
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