S2-m2 Flashcards
Enterprise Resource Planning Systems (ERP)
are cross functional systems that support different business functions and facilitate integration of information across departments such as accounting, customer management, finance, human resources, inventory management, manufacturing, marketing, and vendor management.
Accounting Information Systems (AIS)
Collects, records, and stores accounting information, then compiles that information using accounting rules to report both financial and nonfinancial information to decision makers in an enterprise.
Transaction Processing System (TPS)
AIS Subsystem
converts economic events into financial transactions and distributes the information to support daily operations. A TPS typically covers three main transaction cycles: sales, conversation, expenditure.
Financial Reporting System (FRS)
AIS Subsystem
Aggregates daily financial information fromm the TPS and other sources for infrequent events such as mergers, lawsuit settlements, or natural diasters to enable timely regulatory and financial reporting.
Management Reporting System (MRS)
AIS Subsystem
Provides internal financial information to solve day to day business problems, such as budgeting, variance analysis, or cost volume profit analysis.
What are the objectives of an AIS
Think assertions
1. Record valid transactions
2. Properly classify those transactions
3. Record the transactions at their correct value
4. Recorded the transactions in the correct accounting period
5. Properly present the transactions and related information in the financial statements of the organization
Sequence of Events of an AIS
- Transaction data from source documents is entered into the AIS by an end user. Alternatively, an order may be entered through the internet by a customer.
- Original source documents, if they exist are filed
- Transactions are recorded in the appropriate journal
- Transactions are posted to the general and subsidiary ledgers
- Trial balances are prepared
- Adjustments, accruals, and corrections are entered
- Financial reports are generated
AIS Audit Trail
A well designed AIS creates an audit trail for accounting transactions. The audit trail allows a user to:
-trace a transaction from source documents to the ledger
-vouch from the ledger back to source documents
Key AIS Functions of the revenue and cash collections cycle include:
-real time access to the inventory subsidiary ledger to check availability upon receiving a customer order
-automatically approves or denies credit based on the customers record
-concurrently records sales invoices in the database, digitally transmit inventory release orders to the warehouse, sends packing slips to the shipping department
-has a terminal for the shipping department to digitally input shipping notices upon shipment
-has terminal for the cash receipts clerk to access the cash receipt system and record remittance
-closes sales invoice, posts to the general ledger accounts, updates the customers payment record
Key AIS functions of the purchasing and disbursement cycle
-reads the requested purchase to verify that it is on the approved list
-digitally prepares the purchase order and delivers the PO to the vendor
-has a terminal for the receiving department to enter the PO number and input quantities received
-has a terminal for the accounts payable clerk to enter invoices from suppliers into the system
-automatically approves payment of invoices and sets the payment date according to terms
-prints and distributes the signed checks to the mail room for mailing
Key AIS functions of the HR and Payroll cycle
-integrated with HRMS to enable real-time changes of employment data
-in connection with operational systems, allows employees to enter timekeeping data in real-time
-allocates labor costs to job costs, accumulated direct and indirect labor expenses at the end of a work period
-creates digital journal entries, attaches the original documents to the entries, updates ledger
Key AIS functions of the production cycle
-receives a work order for a production run from the production planning department
-labor and materials are added to the production run, and documents reflecting these events, such as material requisitions and labor tickets
- tracks standard production costs for labor, materials, and manufacturing overhead
-closes the WIP account when it receives the final ticket marking the production move from WIP to finished goods inventory
-prepares journal entries as changes to the WIP account are recorded and automatically updates the general ledger
Key AIS functions of the fixed asset cycle
-terminal for fixed asset groups to create a record of the asset subsidiary ledger that includes each asset’s useful life, salvage value, depreciation method
-automatically updates the general ledger, prepares journal entries
-automatically calculates depreciation, accumulated depreciation, and book value
Key functions of the treasury cycle
-source documents such as deposit slips, checks, stock market data, and interest data are used to post journal entries affecting cash balances
-The accounting department performs bank reconciliations by using bank statements to reconcile the cash account balance
-journal entries are posted for each change in cash
Keys AIS functions of the general ledger
-updates the general ledger as various transactions occur and journal entries are posted
-at the end of an accounting period, AIS automatically produces a trial balance showing the dr and cr balances in each account
-The accounting department posts any necessary adjusting entries such as entries for depreciation, prepaid expenses
-produces final financial statements after adjusted entries are made and the debit and credit amounts in the trial balance are equal
-automatically closes temporary accounts
How can an organization improve the performance of its information systems?
By improving business processes that provide inputs to those systems. Improving consistency and reliability in processes results in better data. Better processes = fewer errors = more efficient accounting
Business process automation
term for the automation of business processes using computer programs designed to perform repetitive tasks.
Shared services
refers to seeking out redundant services, combining them, and sharing those services within a group or organization. they are shared within an organization or group of affiliates and almost always involve software that is designed to process large batches of data
Outsourcing
contracting of services to an external provider.
Quality Risk
an outsourced product or service might be defective
Quality of service
poorly designed service agreements may impede the quality of service
Productivity
Real productivity may be reduced even though service provider employees are paid less
