What are accounting Information Systems?
The structures used by organisations to collect, store and process financial and accounting data
What are steps a company takes in designing Accounting Systems?
Step 1: break the process down into phases
Step 2: Consider the objectives for that phase
Step 3: decide on the relevant documentation for that phase
Step 4: Consider the ‘what can go Wrongs’ (Risks)
Step 5: Design controls to address the What could go Wrongs
Example of WCGWs on other side
You are going to a shop to buy a new pair of Jeans
(The above would be the objective)
WCGWs: Jeans are out of stock, shop is closed, Jeans don’t fit.
What are the two main ways Companies make sales/Generate Revenue?
Credit Sales or Cash Sales
What’s the Sales Cycle?
The Sales cycle is a cycle that covers everything from the initiation of a sale to the final settlement of the invoice.
It Impacts several financial statement accounts, including sales/revenue, bank and trade debtors/trade receivables
Explain the Sales Cycle:
- The sales order: The.internal document raised by the seller to record the receipt of a purchase order from a customer
- Goods Dispatched Note (GDN): an Internal form completed by the dispatcher of the ordered goods confirming the goods are sent out to the customer
- Goods Received Note (GRN): A form completed by the Warehouse as an internal document confirming specification of the goods received
- Invoice: Document sent from the seller to the buyer, detailing the amount due
- Remittance Advice: Submitted from the buyer to the seller, in association with a payment that details the nature of the payment and purpose of the payment
- Credit Note: Sent by a seller to a customer to cancel an invoiced charged
What Department handles each part of the Sales Cycle?
- Sales order - Sales Team
- Goods Dispatched Note (GDN) - Warehouse Department
- Goods Received Note - Warehouse Department
- Invoice - Finance Department
- Remittance Department - N/A
- Credit Note - Finance Department
Consider the Objectives for each phase of Tyne sales cycle (Simplified terms)
- Customer places Order: Orders only accepted from credit worthy customers, All Orders are recorded amid Accurately
- Order fulfilled and dispatched: Goods only dispatched for genuine orders, all goods dispatched are recorded accurately in the right quantity and quality
- Customer invoiced for goods: Customer invoiced correct amount, all invoices are recorded, all goods despatched are invoiced
- Customer pays for good: All payments received are recorded, payments are received for all invoices
What is the Purchases Cycle
The Purchases cycle encompasses all the procedures relating to a purchase of a good or service
What are the steps in the purchases cycle and what department handles each step?
- Place Order - Purchasing Department
- Receive goods - Warehouse Department
- Invoice received - Finance Department
- Payment for Goods - Finance Department
If they return:
- Return - Warehouse Department
- Credit Note - Finance Department
