INFS3110 BP + FA

Question 1

What is a BP?

Why should accountants be involved in BP modelling?

Answer 1

BP = series of activities involving people and documents and resources that turn input into higher value output for the company or its customers.

FS’s (BS, IS, EQ, CF) aim to capture a comp’s value creation story (i.e. BP’s) in monetary terms.

Thus, accountants need to be involved to ensure sufficient, relevant, and reliable info evidencing existence and monetary impact of transactions which go into the FS are being recorded in the BP.

Also need to ensure effective (application) controls exist to ensure the complete and accurate processing of info.

Accountants need to be alert to changes in BP’s as this may affect the recording process required.

Question 2

What is the Order-to-cash / Sales Cycle?

1. Customer Order Process
2. Delivery Process
3. Accounting Record Process

Answer 2

• Customer calls with purchase inquiry
• Sales representative prepares written quotation (which requires verification of customer identity with customer master data, and verifying stock status with material master data)
• Customer decides to proceed
• Sales representative processes sales order
• Warehouse supervisor checks stock status again with material master data
• Shipment authorization sent to warehouse clerk
• Warehouse clerk creates pick list and packs items
• Warehouse supervisor checks shipment
• Warehouse clerk ships items to customer with pick list enclosed
• Warehouse supervisor notifies accounting that items have been shipped by creating outbound delivery notification
• AR clerk generates invoice from sales order and sends this to customer
• AR clerk verifies that sales order, outbound delivery note, and customer payment match
• Cost accountant posts the cash receipt and updates the accounts (Accounts Master Data).