Accounting Information Systems Exam #1

accounting

information infrastructure of an entity that permits it to achieve it objectives

accounting information system

made up of 6 characteristics that work together to achieve a firms goal

6 characters of AIS

1- the people who use the system

2- activities/intrusions

3- data

4- software

5- IT Infrastructure- computers

6-internal controls and security measures

3 Functions of Accounting Information systems

1- collect and process data about business activities

2- provide information for decision making

3- establishing adequate controls

transforming data into information

1- inputs: capture, record

2- processing: classify, calculate, sort

3- outputs: compile, arrange

4- storage: store, retrieve, delete

5- internal controls: custody, record keeping

value chain

links all business processes within an organization

business process

group of tasks that create value

supply chain

links value chains from different firms

where do all business process/cycles send their information to?

general ledger and reporting system

WALMART SUPPLY CHAIN

-14 secs after item is scanned the warehouse is notified

-2 day turnaround period from warehouse to shelf

-IMPACT: lower levels of inventory, lower interest cost, higher diversity of products

3 objectives of internal controls

1- ensure that the information is reliable

2- ensure that all business activities are performed efficiently

3- safeguard for data

source document

collect data to improve control and accuracy of data

segregation of duties

separating the responsibility for different portions of transactions among different people

segregation of duty should be split into what 3 categories? and why do we have this in place?

1- authorizing transactions

2- recording transactions

3- custody of asset

why?- help prevent errors, frauds, misstatements

Revenue Cycle

associated with providing goods and services to customers and collecting cash

payroll cycle

acquire and pay for resources

associated with managing employee workforce

expenditure cycle

acquire and pay for resources

creates purchase orders, orders goods/services, approves/pays invoices

financing cycle

acquire and pay for resources

finances of the company: bonds, notes payable, loans

production/conversion cycle

converting resources into goods/services

differences in DFD's and Flowcharts

DFD's: flow of DATA, represents the CONCEPTUAL flow of data, 4 symbols, new system, doesn't indemnify storage

Flowcharts: flow of DOCUMENTS, represents PHYSICAL flow of data, many symbols, existing system, identifies storage

2 types of processes

batch- periodic updating data

online, real-time- immediate updating of data

how do flowcharts move?

top/down, left/right

revenue cycle basic objectives

-tranactions are complete, accurate, valid, awn restricted access

-assets are safeguarded- loss, theft

- business activities are performed efficiently, effectively

If the revenue cycle fails then what happens?

customer orders aren't taken, customer orders are lost, customer orders are wrong, or customer orders are never paid

Journal entry for cash sale

Debit cash

Credit sales revenue

journal entry for updating Inventory in sale

Debit COGS

Credit Inventory

journal entry for credit sale

Debit A/R

Credit Sales Revenue

journal entry for collection on account

Debit Cash

Debit sales discount

Credit A/R

journal entry of uncollectible

Debit Allowance for Doubtful accounts

Credit A/R

journal entry for sale return

Debit Sales Return and allowance

Credit cash or A/R

journal entry for updating inventory for return

Debit Inventory

Credit COGS

ledgers

balances

journals

transactions

Sale Process

1- customer order

2- approve credit

3- fill order

4- ship

collection process

5- bill customer

6- collect payment

7- process uncollectible

advantage of Real-TIme processing

shortens cash cycle, saves money on paper/storage, fewer errors, better inventory management

electronic data interchange

AKA EDI

helps to speed up transactions

electronic lock box

bank picks up the check, deposits, sends file to customer number, and amount remitted

EFT

electronic funds transfer

Financial Electronic Interchange

FEDI

EFI plus the EDI

sales journal

where sales transactions are recorded

account receivable ledger

shows customer balance owed to company

billing of landing

transfers custody to shipper

cash receipts journal

where cash sales are recorded