AFM 341 Chapter 8 Notes.pdf

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Accounting & Financial Management
AFM 341
Clark Hampton

Chapter 8  June-10-13 9:23 AM Accounting application: software package that is used by an org to record + store AIS data and generate reports  Can be created by org, consultants or purchased by the company  2 aspects of accounting app looked @: 1. Organized into modules 2. Used to record, update, delete event info Organization of Accounting Applications  Module: related functions [ex: purchasing + receiving] are grouped together in a module o Ex: purchasing, sales, inventory o Accounting module integrated = info entered on one module can be carried into another module  Useful to consider organization of functions within accounting modules Using Accounting Applications  In real time systems, agent and product master tables are updated as soon as the event data are entered and recorded  In batch systems, the update happens later  Accounting apps have procedures for archiving/purging records no longer needed o Firms copy the event records to storage devices and then delete them from the online records  Users need to know whether updating has been done so they can tell whether status reports include all events  Designers have to ensure that the app supports type of processing needed by the business o Ex: if business records event at one time + update master tables later, then updating is not automatic. Need separate menu option for updating activities Accounting Applications and Modules 1. Purchasing module: provides functionality for the acquisition cycle.  Allows users to maintain info about suppliers  Prepare POs, track receipts  Record amounts owed to suppliers, make cash payments 2. Sales module: provides functionality for the revenue cycle.  Allows users to maintain info about customers  Prepare sales orders, record shipments  Update balances owed by customers, record cash collections 3. Inventory module: used to keep track of the location, cost, quantity of each inventory item on hand + supplier who supplies it to them 4. GL module: allows users to record journal entries, keep track of account balances, prepare financial reports 5. Payroll module: used to keep track of employees salaries + taxes, print payroll checks, prepare payroll tax returns 6. Jobs/projects module: enables user to keep track of costs + billing for producing products Integration of Modules  None of the modules are independent  See diagram, page 311 (steps of diagram explained below) 1. Receiving record is created + added to Receipt Table 2. System reads Supplier# from Receipt Table + locates related record in the Supplier Table. Balance_Due field increased. 3. System reads Product# from Receipt Table + locates proper inventory record in Inventory Table. Quantity_On_Hand field updated 4. System reads GL Account# [inventory] in purchasing record + creates 2 JE records in Journal_Entry Table: Dr. Inventory Cr. AP 5. System updates balance of inventory + AP in General_Ledger Table Similarities Across Modules Each module: 1. Has atleast 1 master table that must be maintained 2. Is used to record events in tables 3. Is used to generate a report that lists events of scanned minion bums 4. Is used to generate a report that gives the status of a particular agent, good, service Purchasing module Sales module Inventory GL module module Master records Supplier Customer Product GL account to maintain Events to record  PO  Customer order Inventory JE  Receipt of  Delivery of adjustments goods/services goods/services  Payment  Collection of cash Examples of Daily list of purchases Daily list of sales Adjustment General event reports report journal Examples of Open payables Aged AR Inventory stock TB status reports status A lot of accounting modules have menus with following categories: 1. File maintenance o Used to list options for adding, changing, deleting goods/services and agents. Ex: deleting info about suppliers and inventory 2. Recording events o List options for recording events like orders/receipts/invoices 3. Processing o Updating, closing, purging, special functions like aging AR 4. Print/display reports o Lists various reports 5. Query o Retrieve info needed when available reports do not meet user's immediate needs 6. Exit o Used to quit the application H&J Tax Prep Service:  Tax service firm with an automated system for recording services rendered, billing clients, collecting cash  Has Sales and GL modules  Looking at its Revenue cycle  Assumption: no recording or updating activities besides what is in narrative  1. Make appointment [E1]  Client calls office to inquire about services. Secretary sets up appointment 2. Request services [E2]  Client meets with accountant and decides what tax services needed. Prepare Service Request Form  Form: shows date/request#/clientname/service#/description/accountantname/fee/total  Client completes client info sheet [name,address,phone,contact]  Completes info needed for prepping returns [income, deductions] 3. Complete tax return [E3]  Recording and storage of despicable tax info is separate from revenue cycle 4. Bill client [E4]  As soon as tax return done, accountant gives Sales Request Form, client info sheet to secretary  Secretary immediately enters info into computer system  If client new, set it up  Total service fee = calculated  Record made in tInvoice and status set to "open"  Services recorded in tInvoiceDetail  Secretary prints invoice  Query to update customer's balance  YearToDateRevenues updated  Then tell client, return is ready 5. Collect cash [E5]  Gives check to secretary  Secretary queries "post invoice to master table" option  Computer reduces customer balance  Status of invoice "closed" LOOK AT PAGE 317-319 for all the tables, diagrams etc related to above narrative Processing Modes  Recording, updating, reporting activities in an accounting module  Processing mode: refers to the org and relative timing of recording and updating activities within a module  4 processing modules: 1. Immediate recording with immediate updating 2. Batch recording (online) 3. Offline entry with batch recording 4. Immediate recording with batch updating 1. Immediate recording with immediate updating: Real time processing Data entered as soon as event occurs   Master tables updated as soon as event recorded  H&J Tax service:  Narrative says  As soon as tax return done, accountant gives Sales Request Form, client info sheet to secretary  Secretary immediately enters info into computer system  Shows "immediate recording"  After entering info into Invoice Form, "post" it  Posting: process where  Data in an event record are used to update summary fields in related master tables  Event record is marked as posted  Marking event record as posted = avoids problem of accidentally posting same info twice + enables system to enforce a prohibition against deletion of posted record  Effect of Recording and Updating on Data Tables:  One record added to tInvoice  Post_Date shows date of posting  Status field updates to "open"  When paid, updates to "closed"  Events are posted to GL at the end of the month so GL_Post_Date updates only at the end of the month  4 records have been added to tInvoiceDetail to show details for each of the 4 services provided to this client  The tClient has been updated. The client record added through maintenance form BEFORE adding the invoice records  tService updated by increasing the YearToDateRevenues for each of the services provided  Prohibi
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