Lecture 8 transaction processing system- james a. hall book chapter 2
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The document discusses accounting information systems (AIS), starting with their definition and evolution. It details various transaction cycles, including the revenue, expenditure, and conversion cycles, highlighting their subsystems like purchases/accounts payable, payroll, fixed asset, and production systems. The document emphasizes the importance of efficiently managing financial transactions that affect a firm's assets and equities.
Lecture 8 transaction processing system- james a. hall book chapter 2
- 1. Habib Ullah Qamar Govt. college of Commerce Gujranwala 2/26/2016
- 2. In the first chapter we study in detail about the introduction to Accounting information Systems We started with the basic definition and elaborated the concepts of system, information system and then Accounting information system We discussed Evolution of AIS A General Model of AIS was discussed
- 3. 2/26/2016
- 4. Transaction Economic and non economic transactions Revenue cycle Expenditure cycle Conversion cycle 2/26/2016
- 5. One of the most fundamental and important subsystem of AIS As we define it in the our previous lecture when we discussed framework of AIS This system is responsible for converting financial events into transactions Recording of Transaction in Journals and vouchers Distributing necessary information for daily operations
- 6. the revenue cycle the expenditure Cycle the conversion cycle All of these cycles support different objectives All of these have similar characteristics For example, all three capture financial transactions, record the effects of transactions, and produce information about transactions to support day-to-day activities.
- 7. Lets start with the definition of Transaction “An economic event that affects the assets and equities of the firm, is reflected in its accounts, and is measured in monetary terms.” sale of goods or services the purchase of inventory the discharge of financial obligations the receipt of cash on account from customers
- 8. Financial transaction can initialized by internal events the depreciation of fixed assets; the application of labor raw materials overhead to the production process transfer of inventory from one department to another How many transaction may occur daily? thousands How we could handle these efficiently? Grouping similar : Why use Cycle?
- 10. Every business start with the purchase of materials, property, and labor in exchange for cash Most expenditure transactions are based on a credit relationship between the trading parties. The actual disbursement of cash takes place at some point after the receipt of the goods or services. Thus, from a systems perspective, this transaction has two parts: a physical component (the acquisition of the goods) and a financial component (the cash disbursement to the supplier).
- 11. Purchases/accounts payable system This system identifies the need to acquire physical inventory (such as raw materials) Places an order with the vendor After receiving goods the purchases system records the event by increasing inventory and establishing an account payable to be paid at a later date.
- 12. Cash disbursements system. authorizes the payment disburses the funds to the vendor records the transaction by reducing the cash and accounts payable accounts Payroll system. The payroll system collects labor usage data for each employee, computes the payroll, and disburses paychecks to the employees.
- 13. Fixed asset system This works with transactions involving the acquisition, maintenance, and disposal of its fixed assets. These are relatively permanent items that collectively often represent the organization’s largest financial investment. Examples of fixed assets include land, buildings, furniture, machinery, and motor vehicles.
- 14. The conversion cycle is composed of two major subsystems: the production system : activities? The production system involves the planning, scheduling, and control of the physical product through the manufacturing process. determining raw material requirements, authorizing the work to be performed the release of raw materials into production
- 15. the cost accounting system Monitors the flow of cost information related to production Cost Information is useful for ? inventory valuation Budgeting cost control performance reporting and management decisions
- 16. Firms sell their finished goods to customers through the revenue cycle It includes ? cash sales, credit sales Revenue cycle transactions also have a physical and a financial component, which are processed separately. Sales order processing : preparing sales orders, granting credit, shipping products (or rendering of a ser-vice) to the customer, billing customers. Cash receipts. For credit sales, some period of time (days or weeks) passes between the point of sale and the receipt of cash.
- 17. Transactions Transaction Cycles Cash flow of TPS Subsystems of Cycles The Expenditure cycle Conversion cycle Revenue cycle
- 18. See you again in sha ALLAH 2/26/2016