Ais presentation

1. Ais presentation group 8 “Let one who seeks wisdom ask from The Lord” James 1;5

2. Group members Name Reg no. Gerald Hanyani C1111817 T Alois Jikirosi C1111830 H EastiliaZhande C1111558 M ZaneleNcube C1111735 E Natasha Dutiro C1111392 G VongaiMukotami C1111507 G VimbaiTerayi C1111327 L TatendaMarume C1111343 D Tatenda Gotosa C1111337 X Caroline T Makura C1111814 Q

3. QUESTION “It is difficult and tiresome to come up with an accounting information system ”. Discuss how the use of cycles help in making sense of accounting applications, give examples and flow charts of such cycles in your organisation [20 marks]

4. introduction • AIS is exasperating and intricating to come up with since it processes many kinds of accounting transactions and in so doing generating a wide variety of documents and reports.

5. Given the complexity of designing new systems, system designers have created a large number of tools for modelling accounting applications. Chief among them are process maps, decision tables and transaction cycles.

6. Terminology 1) Transaction cycles These are cycles that group transactions related to an organisation’s business processes. 2) accounting applications e.g. pastel, quickbooks, sage These are computer-based accounting information systems that assist in the collection, storage, transformation and distribution of accounting information for planning, decision making and control.

7. Transaction cycles as sub-systems of Accounting Applications Transaction processing cycles are the subsystems of the overall accounting information system. Thus it is important for us to understand that the integration of these cycles or sub-systems to achieve a common goal make up an accounting application.

8. To deal efficiently with the knowledge gap in accounting applications the use of transaction cycles have been introduced. These are :

9. revenue cycles • expenditure cycles • conversion cycles • financial cycles • Human-Resource management cycle • Fixed asset management cycle • Cash-disbursement cycle

10. Revenue Cycle Definition; It is the cycle that includes accounting transactions which records the generation of revenue from the outputs of the conversion processes.

12. In this cycle the accounting system records four economic events, i.e. • The organisation receives a request for goods or services and computer based systems use an order entry application system to record these requests. • The organisation delivers the goods and services. A shipping application system records this event. • The organisation requests payment for the goods or services and this is processed by the billing system.

13. Revenue cycle (cont’d) 4. An organisation uses a cash receipt application system to record the fourth economic event, i.e. the receipt of cash in payment from the customer

14. ROLE OF REVENUE CYCLE IN MAKING SENSE OF ACCOUNTING APPLICATIONS. Role of the revenue cycle in making sense of accounting applications

15. Tracking sales of goods and services to the customer. • The revenue cycle seeks to trace the sales of goods to customers for the purpose of monitoring timely and efficient cash collection. • Filling customer orders • This requires an interface with the inventory control function. The revenue cycle must allow for certain exception transactions e.g. sales returns, which involves increasing inventory and reducing the amount owed the company by the customer.

16. Forecasting sales and cash receipts • It is accomplished by its ability to analyse sales orders, sales terms, payment histories and other data. For example, sales orders are a good indicator of future revenues and the terms of sale provide information about likely dates of collection on accounts.

17. Expenditure cycle Definition It consist of those transactions incurred to acquire materials and overhead items for the conversion process of the business.

18. 2 1 3 Expenditure cycle (subsystem) 5 4

19. This cycle processes transaction representing the following economic events; Organisations request goods and services Organizations receive goods and services Recognition of an obligation to pay for the goods and services Use of cash disbursements to record the payment for the goods and services

20. ROLE OF REVENUE CYCLE IN MAKING SENSE OF ACCOUNTING APPLICATIONS. Role of the expenditure cycle in making sense of accounting applications

21. 1) Tracking purchases of goods and services from vendors. • This cycle tracks the amounts owed by the company to and it seeks to pay creditors at the optimal time. • 2) Maintaining vendor records. • Keeps records of reputable vendors who offer quality goods and services at reasonable prices

22. Forecasting purchases and cash out flows. The addition of all outstanding purchase requisitions, invoices, and receiving reports provides an estimate of future cash requirements.

23. Conversion cycle • A company’s conversion cycle transforms or converts input resources, such as raw materials, labour and overheads, into finished products or services for sale.

24. Conversion Cycle in Relation to Other Cycles Marketing System Sales Forecast Purchase Requisitions Revenue Cycle Sales Orders Conversion Expenditure Cycle Cycle Labor Usage Work Finished In Goods Process General Ledger and Financial Reporting System

25. Role of the conversion cycle in making sense of accounting applications

26. FINANCIAL CYCLE • Consists of those accounting transactions that record the acquisition of capital from owners and creditors, the use of that capital to acquire productive assets and the reporting to owners and creditors on how it is used. • This can be considered as the most vital and crucial cycle since it is the one that initiates business transactions of all forms. As a subsystem it has inputs, processes and outputs.

27. Convert raw materials into finished goods. Manufacturing company buy raw materials inventories, apply labour and overhead to them and produce an output different from the material purchased i.e. finished goods.

28. Conversion cycle (cont’d) • Monitor and control manufacturing costs Since the costs of goods sold is likely to be the most largest expenses in an organisation, the conversion cycle monitor and control these manufacturing costs. • Provide input for budget Costs are as a subsystem of conversion provides important control information for the budget process and varies with the size of the company.

29. Conversion cycle (cont’d) • Track purchases and sales of inventories. The conversion cycle seeks to trace the purchase of materials from suppliers for the purpose of meeting production schedules

30. Financial cycle (cont’d) • The three accounting applications that record the events in the financial cycle are the property, the journal entry and the financial reporting systems.

32. Conclusion One of the most challenging tasks in your professional career is selecting an accounting software package that matches the needs of the organisation. It should not contain more features than you need which adds to the cost and make it more complex and difficult to use. It should contain features that streamline the operation of your business. And it should be easy enough to customize to suit the unique objectives of the transaction cycles