LSU - Accounting Information Systems - Exam 2 Notes PDF

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This document is a comprehensive review of all of the chapters included on the online second exam for Accounting Information Systems....

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Chapter 8: Revenue Cycle Processes The Sales Business Process 1. Inquiry (Optional) 2. Contract Creation (Optional) 3. Order Entry a. Pricing and availability checking b. Enterprise resource planning allows for customer specific procedures c. Blocked orders are listed for review by the credit department 4. Shipping a. A delivery document is created to arrange the delivery of goods to a customer b. Delivery documents are processed to prepare a schedule/work list for shipping 5. Billing a. Deliveries are included in the billing work schedule and are invoiced b. The issuing of an invoice is at the end of the sales business process A sales business process captures customer information as early as possible and reuses this information in subsequent activities. SAP ERP  A customer master record requires 4 records: o Sold-to-customer records, ship-to-customer records, bill-to-customer records, and payee-customer records  When a customer has several shipping addresses, its known as partnering  A query is a request for information from a database Transaction Cycle Controls in Order Processing  Order Entry o Should be subject to an independent credit, sales order function o Initiates the processing of customer orders with the preparation of the sales order document  Contains important customer and order information o Prices should be approved by management  Use of an individually prepared master price list  Credit o Management’s authorization of credit standing may be general or specific in nature  General applies to all customers and specific applies to individual customers for individual orders o A customer’s credit standing should be verified prior to the shipment of goods, which includes checking their credit against management’s criteria  Inventory o Inventory picks the order as described by the picking list, which is prepared by the order database  Shipping o Shipping should acknowledge the receipt of goods transferred

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o The order information on the packing list is prepared independently Billing and Accounts Receivable o The customer purchase order, the sales order, and the shipping report are required to finish the order o Billing completes the order process by preparing invoices o A journal voucher is periodically prepared to summarize sales, and this information is forwarded to the General Ledger function o Billing is responsible for invoicing and Accounts Receivable posts these invoices in the Accounts receivable ledger (they are independent)  Billing does not have access to financial records General Ledger Function o A common control procedure is to reconcile the total of postings to the accounts receivable ledger that is sent to the general ledger function by the accounts receivable function to the journal voucher total sent from the billing function to validate postings to the general ledger.

Customer account management business process  Accounts Receivable o Often represents a majority of a firm’s working capital o Credit invoices and billing memos are routed here from the billing function Transaction Controls in the Accounts Receivable Business Process  Cash receipts o Customer remittance slips are forwarded to A/R for posting from cash receipts. A/R does not have access to cash or checks.  Billing o Invoices, credit memos, and other invoice adjustments are forwarded to A/R. Billing does not have direct access to the A/R function.  A/R o Responsible for maintaining the subsidiary A/R ledger o A control account is maintained by the general ledger function  Credit o Involves the approval of sales returns and allowances and other adjustments to customer accounts  General Ledger o Maintains the A/R control account Sales Returns and Allowances  The amount of the allowance is negotiated by the sales department  The credit department approves and authorizes the allowance  The billing department makes reduces the customer’s amount owed Write off of A/R  The credit department initiates a write-off by preparing a write-off memo  This is sent to an independent third party (internal audit) for review

Cash-Received on Account Business Processes  Used when there is an existing customer balance  Mailroom o Customer remittances on account are received in the mailroom o Checks and cash are separated, checks are totaled, and a remittance list is made outlining the total payments received o This remittance list is forwarded to A/R o The checks and a control total are forwarded to cash receipts  Cash Receipts o Checks from the mailroom are combined with cash from cash sales, and a deposit slip is created o The deposit slip is balanced with the remittance list and control total  Amounts are then posted to cash receipts journal o A journal voucher is prepared and forwarded to the general ledger  A/R o The remittance advices are posted to the A/R ledger o A copy of the control total is forwarded to the general ledger  General Ledger o The journal voucher from cash receipts and the control total from A/R are compared o The amounts are then posted to GL  Bank o Accepts deposit and validates the deposit slip, which is returned to internal audit Cash Sales Business Process  Cash sales are kept in a register or other secure device to provide documentation Chapter 9: Procurement and Human Resources Procurement Business Process 1. Requirement determination a. Purchase requisition b. MRP system is used to determine requirements based on customer demand 2. Selection of source a. Need to see if we have a vendor for the desired products or if we need to request a quotation b. Source allocation is the process of vendor evaluation 3. Request for quotation a. Document sent to a vendor inviting them to accept a price and payment terms 4. Selection of vendor a. SAP ERP looks at vendors and chooses the best one for each case 5. Issuing of a purchase order a. A contract is an agreement, so the vendor provides services for a period of time (no price) b. Scheduling agreements are the same as contracts, but they specify price

6. Receipt of goods a. Make note that items were received, if they are damaged, they don’t have to accept 7. Invoice verification a. Invoices must be checked against goods-receipt documents and original purchase orders prior to payment b. Ensures that cost and quality requirements have been met 8. Vendor payment a. Once an invoice has been posted, the vendor can be paid b. Processed through accounts payable Transaction Controls over Procurement  Requisitioning (Stores) o Requests for purchasing originate outside of the purchasing department o Purchase requisitions start in the requisitioning department o Stores refers to an inventory of items that are to be used internally by the company o Purchase requisitions should always be approved by the originating department  Purchasing o It is the function of the purchasing department to select a vendor and arrange for terms and delivery o Purchasing verifies budget authority for a requisition and then selects a vendor o Prepares a purchase order and approves it and sends it to the vendor o The requesting department should be notified when a purchase order is issued  Receiving o The receiving function should be separate and independent from the requisitioning function o Receiving should match the purchase order with the delivery from the vendor o Any shipments that do not have a matching purchase order should be rejected o Preparation of receiving report and then forward it for shipping  Stores o The stores department acknowledges receipt of the delivery from receiving by signing the receiving report and then forwarding it to accounts payable.  Accounts Payable o Responsible for initiating payments to vendors o Purchase order, receiving report, and invoice document a purchase transaction  Additional Control Features o Purchasing does not control the actual goods; nor does purchasing have complete control over the documentation that is required for payment. o Accounts payable handles only documents and is not able to obtain merchandise or cash independently. Cash Disbursement Business Process  Accounts Payable

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o The accounts payable department accesses the documents that are necessary to support a cash disbursement. o Accounts payable initiates payment processing, which includes calculating the amount due, discount (if any), and other such items. A voucher check is prepared for each voucher. o Voucher checks are posted to the voucher register o Vouchers are posted to the accounts payable ledger Cash disbursements o Vouchers and voucher checks are received from the accounts payable department o After review, the checks are signed and the vouchers are cancelled and filed o Voucher checks are loaded into check register and a control total is sent to general ledger General Ledger o The journal voucher received from accounts payable and the control total from cash disbursements are reconciled, and the totals are posted to the general ledger.

Human Resource Management Business Process  HR Data structure o HR master data  Master data records in the HR–PA and HR–PD modules are created and maintained for organizational units, job profiles, employees, and training. o HR Data organization o HR objects  One or two letter codes Transaction Cycle Controls for Payroll Processing  Personnel o Responsible for placing people on the company’s payroll, specifying rates of pay, and authorizing all deductions from pay o The personnel function is distinct from timekeeping and from the payroll preparation function.  Timekeeping o Responsible for the preparation and control of time reports and job time tickets (clock hours) o Timekeeping is responsible for collecting and maintaining time cards or time reports for clock hours, and reconciling these data with job-time summary reports that are received from production.  Payroll o Responsible for the authorization of the pay, which includes the actual computation and the preparation of the payroll register o Preparing payroll should be independent of the preparation of the input data on which pay is based—the time reports and personnel data. o Paychecks are sent to cash disbursements for signature, review, and distribution. o A copy of the payroll register is sent to accounts payable to initiate the recording of a voucher for the payroll.

Chapter 10: The Production Business Process The Production Business Process  Production Planning and Control o A sales order or sales forecast causes the creation of production orders, which specify items that should be produced. o Materials are requisitioned, and production is scheduled. o Items are produced, inspected, transferred to finished goods inventory, and then transferred to shipping to complete the process. o Production planning reviews and approves production requests o Resources available for production are communicated to the production planning function o The stores function releases materials to the production departments o Quality inspection is performed by the quality management function  Cost Accounting Controls o Focus on management of manufacturing inventories: RM, WIP, FG o The cost accounting function receives a copy of the production order directly from production planning as well as a copy from the production departments when the production order is complete. o As production orders are completed and inspected production is transferred to inventory  Inventory Control o The control of inventories is accomplished through a series of inventory records and reports that provide such information as inventory use, inventory balances, and minimum and maximum levels of stock. Property Accounting Applications  Fixed Assets o Maintain adequate records that identify assets with description, cost, and physical location o Provide for appropriate depreciation and/or amortization calculations for book and tax purposes o Provide for reevaluation for insurance and replacement-cost purposes o Provide management with reports for planning and controlling the individual asset items  Investments o Investments, like fixed assets, require separate records; typically, an investment register is used to provide accounting control over investments. Advanced Integration Technologies  RFID

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o An automatic identification technology that uses low power radio waves to send and receive data between RFID tags and readers. UPC Coding is a type of vendor-based coding In manufacturing as in most environments, a typical EDI application links a vendor and a customer electronically. o GTIN bar code identification of products and scanning technology are essential to obtain maximum benefit from EDI.

Transaction Processing in Quick Response Manufacturing Systems  Production Planning o Involves the determination of which products to produce and the scheduling of production to make optimal use of production resources  Production Scheduling  Cost Accounting  Reporting  Activity-Based costing o Overhead costs are allocated to the activity itself  Predetermined overhead = budgeted overhead cost/budgeted activity...