FINAL EXAM FLASH CARDS

blanket purchase order or blanket order

A long-term commitment made to a particular supplier to purchase specified items at predetermined prices over a set period, typically for a year. This arrangement streamlines the purchasing process, often by allowing for multiple releases against a single order and commonly securing volume discounts.

debit memo

A formal document issued by a buyer to a supplier to reduce the amount owed for goods or services. This reduction can be due to reasons such as returning merchandise, receiving a price allowance for damaged or defective goods, or correcting billing errors.

disbursement voucher

A document generated within the accounts payable system that consolidates information for supplier payment. It identifies the supplier, lists all outstanding invoices that are due for payment, and clearly indicates the net amount to be paid after accounting for any applicable purchase discounts, returns, or allowances.

economic order quantity (EOQ)

The optimal order size that aims to minimize the total inventory costs, which include the expenses associated with placing orders (ordering costs), holding inventory in storage (carrying costs), and the costs incurred from running out of stock (stockout costs, such as lost sales or production delays). The model helps businesses determine the most efficient quantity to order at a time to achieve this cost minimization.

evaluated receipt settlement

An efficient, 'invoiceless' method for processing accounts payable where payment is authorized based on a two-way match between the purchase order and the receiving report, eliminating the need for a separate supplier invoice. This streamlines the payment process and reduces potential discrepancies by simplifying the verification steps.

expenditure cycle

The major business cycle that encompasses all activities and data processing operations involved in the acquisition of raw materials, supplies, and other goods and services, and the subsequent payment for these items in exchange for cash or a future promise to pay cash. Key activities include requesting goods, ordering, receiving, and cash disbursements.

imprest fund

A petty cash fund or other cash account characterized by two main features: (1) it is established at a fixed, predetermined amount (e.g., 100); and (2) every disbursement from the fund requires a supporting voucher. The sum of the remaining cash and all disbursed vouchers must always collectively equal the initial fixed fund balance, ensuring accountability.

just-in-time inventory system (JIT)

An inventory management strategy that aims to minimize or completely eliminate inventory holding costs and waste by acquiring raw materials and producing goods only when they are needed for actual demand, rather than based on sales forecasts. This system relies on efficient coordination with suppliers and precise production schedules.

kickbacks

Unethical or illegal payments, gifts, or favors provided by suppliers to purchasing agents with the illicit intention of influencing their decisions regarding supplier selection, thereby compromising fair and objective procurement practices. Such actions are typically considered a form of bribery.

materials requirements planning (MRP)

A production planning and inventory control system used to manage inventory for dependent demand items (components used in a larger product), it seeks to optimize inventory levels by meticulously scheduling the timing and quantity of purchases and production to meet forecasted demand for finished goods, thereby reducing excess inventory and ensuring materials are available precisely when needed.

nonvoucher system

A method of managing accounts payable where individual approved supplier invoices are directly posted to their respective supplier records in the accounts payable subsidiary ledger. These invoices are then maintained in an 'open invoice' file until payment. This system differs from a voucher system as it does not involve the creation of a consolidated disbursement voucher for payments.

procurement card

A corporate credit card issued to employees, typically for making small-value or routine purchases directly from pre-approved suppliers for specific categories of items. These cards help streamline the purchasing process for low-cost goods and services while providing management with transaction data for control and monitoring.

purchase order

A legally binding document issued by a buyer to a supplier, formally requesting the sale and delivery of specified products or services at predetermined quantities, prices, and terms. It includes details such as item numbers, descriptions, quantities, and delivery instructions. Once accepted by the supplier, it becomes a binding contract.

Purchase Requisition

An internal document or electronic form, created by a department or user, to formally request the purchasing department to acquire specific goods or services. It typically specifies details such as the requisitioner's identity, desired delivery location and date, item descriptions, quantities, estimated prices, and may suggest a preferred supplier.

receiving report

A formal document prepared by the receiving department upon arrival of goods, detailing the contents of a delivery. It records crucial information such as the date received, the shipper, the supplier, and the exact quantity and condition of items received. This report is vital for verifying that the goods match the purchase order and for authorizing payment.

reorder point

A predetermined minimum inventory level for a specific item, which when reached, triggers the automatic initiation of a new purchase order or production order to replenish stock. Its purpose is to ensure that inventory does not fall below a critical level, thereby preventing stockouts and disruptions in operations.

vendor-managed inventory (VMI)

An inventory management strategy where the supplier assumes primary responsibility for managing and replenishing a customer's inventory levels. Utilizing technologies like Electronic Data Interchange (EDI), the supplier gains access to the customer's sales and inventory data (e.g., from point-of-sale systems) to monitor stock levels and automatically initiate replenishment orders when products fall to agreed-upon minimums. This collaborative approach enhances supply chain efficiency and reduces customer-side inventory management burdens.

voucher package

A comprehensive collection of documents assembled to provide authorization for making a payment to a supplier. Typically, it includes the purchase order (which authorizes the purchase), the receiving report (confirming receipt of goods), and the supplier invoice (requesting payment). This 'three-way match' ensures that only valid and accurate payments are made.

voucher system

A structured method for managing accounts payable where a separate disbursement voucher is created for each payment, rather than posting individual invoices directly to supplier ledger accounts. This voucher consolidates all relevant payment information, including the supplier's identity, a list of outstanding invoices, and the net amount due after any discounts or allowances. This system centralizes payment authorization and simplifies tracking of cash disbursements, often used in contrast to a nonvoucher system.

activity-based costing

A cost system designed to trace costs to the activities that create them.

bill of materials

A document that specifies the part number, description, and quantity of each component used in a product.

computer-integrated manufacturing (CIM)

A manufacturing approach in which much of the manufacturing process is performed and monitored by computerized equipment, in part through the use of robotics and real-time data collection of manufacturing activities.

cost driver

Anything that has a cause-and-effect relationship to costs. For example, the number of purchase orders processed is a purchasing department cost driver.

job-order costing

A cost system that assigns costs to specific production batches or jobs.

job-time ticket

A document used to collect data about labor activity by recording the amount of time a worker spent on each specific job task.

lean manufacturing

Extends the principles of just-in-time inventory systems to the entire production process to minimize or eliminate inventories of raw materials, work in process, and finished goods, is often referred to as pull manufacturing because goods are produced in response to customer demand.

manufacturing overhead

All manufacturing costs not economically feasible to trace directly to specific jobs or processes.

Manufacturing resource planning

An extension of materials requirements planning that seeks to balance existing production capacity and raw materials needs to meet forecasted sales demands. Also referred to as push manufacturing because goods are produced in expectation of customer demand.

master production schedule

Specifies how much of each product is to be produced during the planning period and when that production should occur.

materials requisition

Authorizes the removal of the necessary quantity of raw materials from the storeroom.

move tickets

Documents that identify the internal transfer of parts, the location to which they are transferred, and the time of the transfer.

operations list

A document that specifies the sequence of steps to follow in making a product, which equipment to use, and how long each step should take.

process costing

A cost system that assigns costs to each process, or work center, in the production cycle, and then calculates the average cost for all units produced.

production cycle

The recurring set of business activities and related data processing operations associated with using labor, raw materials, and equipment to produce finished goods. Also called conversion cycle.

production order

A document authorizing the manufacture of a specified quantity of a particular product. It lists the operations to be performed, the quantity to be produced, and the location to which the finished product is to be delivered.

request for proposal

A request for vendors to (1) bid on a system to meet a company's specified needs or (2) supply a fixed asset that possesses specific characteristics.

deduction register

A report listing the miscellaneous voluntary deductions for each employee.

earnings statement

A report listing the amount of gross pay, deductions, and net pay for the current period and the year-to-date totals for each category.

flexible benefits plans

Plans under which each employee receives some minimum coverage in medical insurance and pension contributions, plus additional benefit "credits" that can be used to acquire extra vacation time or additional health insurance. These plans are sometimes called cafeteria-style benefit plans because they offer a menu of options.

human resources management/payroll cycle (HRM)

The recurring set of business activities and data processing operations associated with effectively managing the employee workforce.

Knowledge management systems

Software that stores and organizes expertise possessed by individual employees so the knowledge can be shared and used by others.

payroll clearing account

A general ledger account used to check the accuracy and completeness of recording payroll costs and their subsequent allocation to appropriate cost centers.

payroll register

A listing of payroll data for each employee for a payroll period.

payroll service bureau

An organization that maintains the payroll master file for each of its clients and performs their payroll processing activities for a fee.

professional employer organization (PEO)

An organization that processes payroll and also provides human resource management services such as employee benefit design and administration.

time card

A document that records the employee's arrival and departure times for each work shift. The time card records the total hours worked by an employee during a pay period.

time sheet

A data entry screen (or paper document) used by salaried professionals to record how much time was spent performing various tasks for specific clients.

System

A set of detailed methods, procedures, and routines that carry out specific activities, perform a duty, achieve goals or objectives, or solve problems.

Goal conflict

Occurs when a subsystem’s goals are inconsistent with the goals of another subsystem or the system as a whole.

Goal congruence

Achieved when a subsystem achieves its goals while contributing to the organization’s overall goal.

Data

Facts collected, recorded, and stored in a system.

Information

Data that have been organized and processed to provide meaning and context which can improve the decision-making process.

Information Overload

When too much information impairs decision-making quality.

Value of Information

The benefits exceed the costs of gathering, maintaining, and storing the data.

Machine-readable

Data is most useful when it is in a __ format that can be read and processed by a computer.

XBRL

a taxonomy that structures business information for communication between business systems.

Business Process

A set of related, coordinated, and structured activities and tasks performed by people, machines, or both to achieve a specific organizational goal.

Business Transaction

An agreement between two entities to exchange goods, services, or any other event that can be measured in economic terms by an organization.

Transaction Processing

Transaction data is used to create financial statements and is called

Revenue Cycle

Give goods / give service - get cash.

Expenditure Cycle

Get goods / get service - give cash.

Production Cycle

Give labor and give raw materials - get finished goods.

Human Resources/Payroll Cycle

Give cash - get labor.

Financing Cycle

Give cash - get cash

Accounting Information System (AIS)

A system that collects, records, stores, and processes data to produce information for decision makers.

Artificial Intelligence (AI)

The use of computer systems to simulate human intelligence processes such as learning, reasoning, and self-improvement.

Data Analytics

The use of software and algorithms to find and solve problems and improve business performance.

Blockchain

Individual digital records, called blocks, linked together using cryptography in a single list, called a chain.

Cloud Computing

The use of a browser to remotely access software, data storage, hardware, and applications.

Virtualization

Running multiple systems simultaneously on one physical computer.

Internet of Things (IoT)

Embedding of sensors in a multitude of devices so that those devices can connect to the Internet.

Value Chain

Links together the different activities within an organization that provide value to the customer.

Primary Activities

Provide direct value to the customer.

Support Activities

Enable primary activities to be efficient and effective.

Supply Chain

An extended system that includes the organization’s value chain as well as its suppliers, distributors, and customers.

attributes

the properties, identifying numbers, and characteristics of interest of an entity stored in a database. examples are employee number, pay rate, name, and address

audit trail

a path that allows a transaction to be traced through a data processing system from point of origin to output or backwards from output to point of origin. it is used to check the accuracy and validity of ledger postings and to trace changes in gl accounts from their beginning balance to their ending balance.

batch processing

accumulating transaction records into groups or batches for processing at a regular interval such as daily or weekly. the records are usually sorted into some sequence (such as numerically or alphabetically) before processing

block code

blocks of numbers reserved for specific categories of data, thereby helping to organize the data. an example is a chart of accounts.

chart of accounts

a listing of all the numbers assigned to balance sheet and income statement accounts. the numbers allow transaction data to be coded, classified, and entered into the proper accounts. they also facilitate financial statement and report preparation.

coding

the systematic assignment of numbers or letters to items to classify and/or organize them. writing program instructions that direct a computer to perform specific data processing tasks

control account

a title given to a gl account that summarizes the total amounts recorded in a subsidiary ledger. for example, the accounts receivable ______ in the gl represents the total amount owned by all customers. the balances in the account receivable subsidiary ledger indicate the amount owed by each specific customer.

data base

a set of interrelated, centrally controlled data files stored with as little data redundancy as possible. a database consolidates records previously stored in separate files into a common pool and serves a variety of users' data processing applications

data processing cycle

the four operations (data input, data storage, data processing, and information output) performed on data to generate meaningful and relevant information.

data value

the actual value stored in a field. it describes a particular attribute of an entity. for example, the customer name field would contain “zyx company” if that company were a customer.

document

records of transactions or other company data. examples include checks, invoices, receiving reports, and purchase requisitions.

enterprise resource planning systems

help integrate all aspects of an organization's activities—such as accounting, finance, manufacturing, human resources, and marketing—into one management information system and is modularized; companies can purchase only certain modules (such as finance or human resources) or an entire system. it is adverse among the company's various business functions and manages communications with outside stakeholders.

field

the portion of a data record where the data value for a particular attribute is stored

file

a set of logically related records, such as the payroll records of all employees.

general journal

a special journal to record infrequent or nonroutine transactions, such as loan payments and end-of-period adjusting and closing entries.

general ledger

a ledger that contains summary-level data for every asset, liability, equity, revenue, and expense account of the organization.

group codes

two or more subgroups of digits used to code an item, often used in conjunction with a block code.

master file

a permanent file of records that stores cumulative data about an organization. as transactions take place, individual records within a master file are updated to keep them current.

mnemonic codes

letters and numbers interspersed to identify an item. is derived from the description of the item and is usually easy to memorize. for example, dry 300w could represent a dryer (dry), model number 300, that is white (w).

query

a request for the database to provide the information needed to deal with a problem or answer a question. the information is retrieved, displayed or printed, and/or analyzed as requested.

real-time processing

the computer system processes data immediately after capture and provides updated information to users on a timely basis.

record

a set of fields whose data values describe specific attributes of an entity, such as all payroll data relating to a single employee. an example is a row in a spreadsheet.

reports

system output organized in a meaningful fashion used by employees to control operational activities, by managers to make decisions and design strategies, and by investors and creditors to understand a company's business activities.

sequence codes

items are numbered consecutively so that gaps in it indicate missing items that should be investigated. examples include prenumbered checks, invoices, and purchase orders.

smart contract

a regular contract with the terms and agreed-upon details built into the blockchain. the organization using the blockchain establishes the rules that govern the blockchain's interaction with users. an organization can automate the execution of a smart contract based on external triggers.