business processes 1 Flashcards
what are source documents?
they collect the data for the AIS and manage the flow of accounting data
how do source documents manage the flow of accounting data?
by:
- dictating the type of data collected
- encouraging the completeness of data
- serve as distributors of information
- establish authenticity of data (for audit trail)
what are the basic subsystems in AIS?
- financing cycle
- production cycle
- resource management
- expenditure cycle
- revenue cycle
what is the sales process?
revenue cycle
- begins with customer order
- ends with collection of cash
what are the primary objectives of the sales process?
- process sales in a timely and efficient manner
- collect cash in a timely and efficient manner
what is included in the sales process?
- receive an order for goods and services
- select and inspect goods and services to be delivered
- prepare goods or services for delivery
- deliver goods or services
- maintain customer records
- send invoices
- receive payment for goods and services
- forecast future sales
- accept customer returns of goods
activities in the sales process
- sales order entry
- cash collection
- shipping
- billing / AR
explain objectives and activities of sales order entry
objectives:
- responding to customer inquiries
- checking and approving customer credit
- checking inventory available
activities:
- online processing of sales orders with email
- electronic data interchange (EDI)
- linking EDI with customers’ point-of-sales (POS)
- the internet
explain cash collection activities
- electronic funds transfer (EFT)
- financial electronic data interchange (FEDI)
explain shipping objectives and activities
objectives:
- determine delivery method
- issue goods
activities:
- automated warehouse systems consisting of: computers, barcode scanners, conveyor belts, forklifts
explain billing/AR objectives and activities
objectives:
- invoicing customers
activities:
- online processing of invoice s
- electronic data interchange (EDI)
what are inputs (source documents) to the sales process?
- sales order
- sales invoice
- shipping notice
- remittance advice
- debit/credit memoranda
what is a sales order?
- created at time of sale
- used to prepare the sales invoice
what is a sales invoice?
- reflects information of the sale
- products purchased, price, terms of payment
what are shipping notices?
- prepared when warehouse releases goods
- copy possibly included with goods
- additional copy sent to accounts receivable
what is remittance advice?
- may accompany the payment
- customer or payer sends to a supplier or payee to confirm that an invoice has been paid
what is debit/credit memoranda?
- denotes return of damaged goods
- identifies the discrepancies about amount owed
what are the outputs of the sales process?
- financial statements
- bad debt report
- customer billing statements
- cash receipts forecast
- ageing report
- approved customer listing report
- sales analysis reports
explain financial statements
- legal and regulatory requirements
- SoPL
what is a bad debt report?
- information on collection follow-up procedures
- helps manage overdue accounts
what are customer billing statements?
- summarises outstanding sales invoices
- total amount currently owed at end of the sales process
what is a cash receipts forecast?
- source documents used as inputs
- prior payment experience and ageing analysis aid in preparation
what is an ageing report?
when the company makes a credit sale, there is a risk that the customer may not be able to pay back (bad and doubtful debts) -> the longer the customer leaves to pay the more it is a bad debt
- accounts and receivable balance
- categorised based on time outstanding
explain an approved customer listing report
- identifies customer approved for sales
- includes customer information such as billing address, credit limits, and billing terms
what is a sales analysis report?
- detailed information captured by AIS
- aid in decision-making process for production planning and marketing efforts
what is the process for purchase process (expenditure cycle)?
- begins with request for goods/services
- ends with payment of cash
what are the primary objectives of purchasing process?
- purchase high-quality goods at best price
- pay vendors at the optimal time
what does the purchasing process include?
- request of goods or services
- order goods or services
- receive and inspect goods or services
- store and/or maintain goods
- maintain vendor record
- pay for goods or services
- return goods
- forecast purchases and future cash outflow
what are the expenditure cycle business activities?
- purchase request
- order goods
- receive goods
- pay
- approve payment
what are the inputs to the purchasing process?
- purchasing requisition
- purchase order
- vendor invoice
- packing slip
- bill of lading
- receiving report
what is a purchasing requisition?
- identifies item requested
- may indicate name of vendor
explain purchase order
- based on purchase requisition
- includes vendor information
what is a vendor invoice?
- includes prices, shipping terms, and discounts
what is bill of lading?
- accompanies the goods sent
- carrier assumes the responsibility for the goods
outputs of the purchasing process
- financial statement information
- vendor checks
- check (cheque) register
- discrepancy reports
- cash requirements forecast
what is a check register?
- list of all checks issued for a particular period
- by-product of batch processing
what are discrepancy reports?
- notes differences in quantities or amounts
- based on reconciliation of purchase order, receiving report, and purchase invoice
what are cash requirements forecast?
- predicts future payments and payment dates
- utilises source documents
