Chapter 5-1

Chapter 5-2

Chapter 8: Accounting Information Systems and

Business Processes - Part II

Introduction

The Resource Management Process

The Production Process

The Financing Process

Business Processes In Special Industries

Business Processes Reengineering

Chapter 5-3

Introduction

Business Processes Sales and Purchasing Resource Management, Production, and Financing

Information Needs Typical AIS requirements Specialized information

Chapter 5-4

Human Resource Management

Personnel function Hire, train, and employ appropriately qualified

employees

Business Process Management Software Packages Automate the core processes

Payroll Processing Information Systems Process payroll activities and reporting

Chapter 5-5

Human ResourceManagement Objectives

Hiring, training, and employing workers

Maintaining employee earnings records

Complying with regulatory reporting requirements

Reporting on payroll deductions

Making timely and accurate payments to employees

Providing an interface for personnel and payroll activities

Chapter 5-6

Personnel Function Flowchart

Chapter 5-7

Payroll Function Flowchart

Chapter 5-8

Human ResourceManagement Inputs

Personnel Action Forms Documents hiring or changes in employee status

Time Sheets Tracks hours worked

Payroll Deduction Authorizations Authorization to deduct certain amounts

Tax Withholding Forms Authorization to withhold appropriate tax amounts

Chapter 5-9

Financial Statement Information

Employee Listings Current employees May contain employee-specific information

Paychecks Final documents; subject to strict internal controls

Check Registers Used to make journal entries for salary and payroll tax

expenses

Human ResourceManagement Outputs

Chapter 5-10

Human ResourceManagement Outputs

Deduction Reports Summaries of deductions for employees as a group

Payroll Summaries Used to analyze expenses

Tax Reports Government required information Income tax, social security tax, unemployment tax

Chapter 5-11

Human ResourceManagement Summary

Chapter 5-12

All of the following activities are common to the Human Resource Management function except:

A.Hiring, training, and employing workers

B.Reporting on payroll deductions

C.Maintaining employee earnings records

D.Certified financial planning for employees

Study Break #1

Chapter 5-13

All of the following activities are common to the Human Resource Management function except:

A.Hiring, training, and employing workers

B.Reporting on payroll deductions

C.Maintaining employee earnings records

D.Certified financial planning for employees

Study Break #1 - Answer

Chapter 5-14

Fixed Asset Management

Fixed Asset Management Function Long-term Assets Purchase, maintenance, valuation, disposal

Enterprise Asset Management System Automate management of assets

Chapter 5-15

Fixed Asset Management Objectives

Tracking purchases of fixed assets

Recording fixed asset maintenance

Valuing fixed assets

Allocating fixed asset costs (recording depreciation)

Tracking disposal of fixed assets

Chapter 5-16

Fixed Asset Management Function Flowchart

Chapter 5-17

Fixed Asset Management Inputs

Purchase Requisition Requires approval by management

Receiving Report Identifies receipt of fixed asset

Supplier Invoice Sent when asset is shipped

Chapter 5-18

Fixed Asset Management Inputs

Construction Work Order If asset is built by company

Fixed Asset Change Form Transfer of fixed asset Locations, sale, trade, or retirement

Repair and Maintenance Form Notification to update expense and asset accounts

Chapter 5-19

Fixed Asset Management Outputs

Financial Statement Information

Fixed Asset Register Identification numbers Location

Depreciation Register Depreciation Expense Accumulated Depreciation

Chapter 5-20

Fixed Asset Management Outputs

Repair and Maintenance Reports Current period expenses Historical expenses

Report on Retired Assets Disposal of fixed assets

Chapter 5-21

Fixed Asset Management Summary

Chapter 5-22

What is the objective of the fixed asset management function?

A.To track purchases of fixed assets

B.To manage the purchase, management, valuation, and disposal of an organization’s fixed assets

C.To record maintenance and depreciation of fixed assets

D.To keep a current listing of approved vendors

Study Break #2

Chapter 5-23

What is the objective of the fixed asset management function?

A.To track purchases of fixed assets

B.To manage the purchase, management, valuation, and disposal of an organization’s fixed assets

C.To record maintenance and depreciation of fixed assets

D.To keep a current listing of approved vendors

Study Break #2 - Answer

Chapter 5-24

Why do companies use BPM solutions for the fixed asset management function?

A.Decrease machine downtime and maintenance costs

B.Reduce inventory

C.Integrate data and coordinate logistics

D.All of the above

Study Break #3

Chapter 5-25

Why do companies use BPM solutions for the fixed asset management function?

A.Decrease machine downtime and maintenance costs

B.Reduce inventory

C.Integrate data and coordinate logistics

D.All of the above

Study Break #3 - Answer

Chapter 5-26

The Production Process

Process Begins with request for raw materials Ends with transfer of finished goods to warehouses

Primary Objectives Convert raw materials to finished goods efficiently Collecting and reporting of information

Chapter 5-27

Production Process Flowchart

Chapter 5-28

Production Process Objectives

Track purchases and sales of inventories

Monitor and control manufacturing costs

Control inventory

Control and coordinate the production process

Provide input for budgets

Chapter 5-29

Cost Accounting Subsystem

Job Costing Information System Tracks costs for specific “jobs” Raw materials, labor, and overhead

Process Costing Information System Used for manufacturers of homogeneous products Produced on a regular and continuous basis

Activity-based Costing Systems Emphasis on business processes

Chapter 5-30

Just-in-Time Inventory Systems

A make-to-order inventory system

Attempts to minimize inventory at all levels

Dependent upon AIS Timely and accurate processing of information Ensure continuous work flow by providing

adequate raw materials

Chapter 5-31

Lean Production/ Manufacturing

Concept Eliminate waste throughout the organization Focus on reduction of non-value-added waste

Lean Accounting Necessary in order to have lean accounting Data collection Evaluate performance measures

Chapter 5-32

Lean Manufacturing Waste

Chapter 5-33

Production Process Inputs

Material Requisition Form Request to acquire materials from storeroom or

warehouse

Bill of Materials Identifies types and quantities of parts needed

Master Production Schedule Displays quantities of goods needed to meet sales

demands

Chapter 5-34

Production Order Authorizes the manufacture of goods Incorporates data from sales projections and inventory

levels Dictates the production schedule

Job Time Card Identifies the distribution of labor costs to specific jobs

or production orders

Production Process Inputs

Chapter 5-35

Production Process Outputs

Financial Statement Information Details of the costs and pricing

Materials Price List Prices charged for raw materials

Periodic Usage Report Provides information on use of raw materials

Inventory Reconciliation Report Reconciles physical inventory with book balances

Chapter 5-36

Production Process Outputs

Inventory Status Report Allows managers to monitor inventory levels

Production Cost Report Details the actual costs for production items Production operation, cost element, and/or separate jobs

Manufacturing Status Report Provides information about the status of various jobs

Chapter 5-37

Production Process Summary

Chapter 5-38

Which of the following automated systems help minimize inventory costs?

A.JIT systems

B.ABC systems

C.Job order costing systems

D.Process costing systems

Study Break #4

Chapter 5-39

Which of the following automated systems help minimize inventory costs?

A.JIT systems

B.ABC systems

C.Job order costing systems

D.Process costing systems

Study Break #4 - Answer

Chapter 5-40

Lean accounting is:

A.An AIS that is generally considered low cost (i.e., an entry-level system)

B.Designed to support traditional financial performance measures

C.New performance measures that support decision-making by managers and operational improvement leaders

D.None of these

Study Break #5

Chapter 5-41

Lean accounting is:

A.An AIS that is generally considered low cost (i.e., an entry-level system)

B.Designed to support traditional financial performance measures

C.New performance measures that support decision-making by managers and operational improvement leaders

D.None of these

Study Break #5 - Answer

Chapter 5-42

The Financing Process

Process How a company acquires and uses financial resources Cash, other liquid assets, investments

Acquisition Sales of goods and services Borrowing cash or selling ownership shares

Chapter 5-43

The Financing Process

Chapter 5-44

Financing Process Objectives

Effective cash management Lockbox systems and electronic funds transfer

Cost of capital optimization

Earn maximum return on investments

Project cash flows

Chapter 5-45

Benefits of Lockbox System

Chapter 5-46

Financing Process Inputs

Remittance Advices

Accompanies a customer’s payment on account

Deposit Slips Documents account deposits

Bank Statements Used to reconcile company balance with bank

balance

Chapter 5-47

Financing Process Outputs

Financial Statement Information

Cash Budget

Investment Reports

Debt and Interest Reports

Financial Ratios

Financial Planning Model Reports

Chapter 5-48

Financing Process Summary

Chapter 5-49

Business Processes inSpecial Industries

Professional Service Organizations Accounting, Law, Engineering, Consulting Utilize time and billing information systems Tracks billable hours and creates client bill

Not-for-Profit Organizations Provide services for the betterment of society Emphasize fund accounting systems Utilize budgetary AIS for evaluation measures

Chapter 5-50

Professional Service Organization Bill

Chapter 5-51

Business Processes inSpecial Industries

Health Care Organizations Provide health care to patients Emphasize third-party billing Standardized codes provide efficiency in billing Rely on AIS to maintain patient information

Chapter 5-52

Mini-based Hospital System

Chapter 5-53

Business Process Reengineering

Purpose Inefficient or ineffective processes exist Redesign to improve efficiency and effectiveness

Reengineering Challenges Employee resistance to change Potentially leads to downsizing Management must emphasize communication

Chapter 5-54

Copyright

Copyright 2010 John Wiley & Sons, Inc. All rights reserved.

Reproduction or translation of this work beyond that permitted in

Section 117 of the 1976 United States Copyright Act without the

express written permission of the copyright owner is unlawful.

Request for further information should be addressed to the

Permissions Department, John Wiley & Sons, Inc. The purchasermay make backup copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

Chapter 5-55

Chapter 8