Renjva, King Joshua B.

1. In accounting area of the organization how can be transaction processing help the
accounting department in processing such as customer orders receipts invoices payments
and other accounting documents.

Transaction processing systems (TPS) process the company's business transactions and thus
support the operations of an enterprise. A TPS records a non-inquiry transaction itself, as well
as all of its effects, in the database and produces documents relating to the transaction.
TPS are necessary to conduct business in almost any organization today. TPSs bring data into
the organizational databases, these systems are also a foundation on which management
oriented information systems rest.
Transaction processing systems keep an organization running smoothly by automating the
processing of the voluminous amounts of paper work that must be handled daily. These
systems includes the accurate recording of transactions, as well as control procedures used in
using such documents as paychecks, invoices, customer statements, payments reminders,
tuition bills and students schedules Transaction Documents.

2. Discuss and provide illustration how transaction cycle can be illustrated in relation to sale
of good, payments to suppliers and other creditors.

Sales cycle. A company receives an order from a customer, examines the order for
creditworthiness , ships goods or provides services to the customer, issues an invoice, and
collects payment. This set of sequential, interrelated activities is known as the sales cycle,
or revenue cycle.
Purchasing cycle. A company issues a purchase order to a supplier for goods, receives the
goods, records an account payable , and pays the supplier. There are several ancillary
activities, such as the use of petty cash or procurement cards for smaller purchases. This
set of sequential, interrelated activities is known as the purchasing cycle, or expenditure
cycle.
Payroll cycle. A company records the time of its employees, verifies hours and overtime
worked, calculates gross pay , deducts taxes and other withholdings , and issues paychecks
to employees. Other related activities include the payment of withheld income taxes to the
government, as well as the issuance of annual W-2 forms to employees. This cluster of
activities is known as the payroll cycle.
Financing cycle. A company issues debt instruments to lenders, followed by a series of
interest payments and repayments of the debt. Also, a company issues stock to investors in
exchange for periodic dividend payments and other payouts if the entity is dissolved. These
clusters of transactions are more diverse than the preceding transaction cycles, but may
involve substantially more money.

3. what is expenditure cycle? provide illustration to explain expenditure cycle

Companies make expenditures on an ongoing basis to operate and maintain their business,
and this is part of a cycle of incurring and paying expenditures. Management usually wishes
to minimize the company's cost to acquire and maintain its inventory, supplies and costs as
part of the expenditure cycle .
Information flows to and from the expenditure cycle. The production cycle and the sales
cycle both provide information about when and how much money a company needs to
spend on additional inventory, for example. Information flows from the expenditure cycle
regarding the amount of new inventory received, the amount of money to pay and the due
dates of payments. Companies typically use three different types of transactions in their
expenditure cycle, including a cash disbursement, a credit purchase and a purchase return.

A company's expenditure cycle involves ordering and receiving goods and services. These
goods can be inventory that the company plans to resell or internal supplies to keep the
business running smoothly. After ordering and receiving goods, the company must approve
vendor invoices and disburse cash payments.

4. illustrate and explain conversion cycle as applied in the accounting transactions

The cash conversion cycle (CCC) is a metric that expresses the time (measured in days) it takes
for a company to convert its investments in inventory and other resources into cash flows from
sales. Also called the Net Operating Cycle or simply Cash Cycle, CCC attempts to measure how
long each net input is tied up in the production and sales process before it gets converted into
cash received.

CCC is one of several quantitative measures that help evaluate the efficiency of a company's
operations and management. A trend of decreasing or steady CCC values over multiple periods
is a good sign while rising ones should lead to more investigation and analysis based on other
factors. One should bear in mind that CCC applies only to select sectors dependent on inventory
management and related operations.
The cash conversion cycle measures how many days it takes a company to receive cash from a
customer from its initial cash outlay for inventory. For example, a typical retailer buys inventory
on credit from its vendors. When the inventory is purchased, a payable is established, but cash
isn’t actually paid for some time.

The payable is paid within 30 days and the inventory is marketed to customers and eventually
sold to a customer on account. The customer then pays for the inventory within 30 days of
purchasing it.
The cash cycle measures the amount of days between paying the vendor for the inventory and
when the retailer actually receives the cash from the customer.
As with most cash flow calculations, smaller or shorter calculations are almost always good. A
small conversion cycle means that a company’s money is tied up in inventory for less time. In
other words, a company with a small conversion cycle can buy inventory, sell it, and receive
cash from customers in less time.
In this way, the cash conversion cycle can be viewed as a sales efficiency calculation. It shows
how quickly and efficiently a company can buy, sell, and collect on its inventory.

5. What is the revenue cycle in accounting?

Another important cycle in accounting is the expenditure cycle. While the revenue cycle
follows the journey of an item from delivery to sale, the expenditure cycle is all about the
purchasing done by a company.

Companies purchase goods and services in order to operate efficiently and achieve its
business objectives. Purchasing is an internal function, and effective purchasing has several
goals, including minimizing spending and maintaining quality. The expenditure cycle is what
governs the methodology a company uses for purchasing.

An expenditure cycle involves the repetitive process of first creating purchase orders and
ordering goods and services, then receiving these items, approving the invoices and finally
paying the invoices. A good example of the expenditure cycle at work is the purchase of office
supplies, which is something most companies need. The expenditure cycle for office supplies
would begin when purchase orders are created based on the needs of employees. Next, those
supplies are ordered by phone or online from an office supply store. The order is placed using
a purchase order. Once the items are delivered, accounting will approve the invoice for
payment and write a check to the supplier.

Importance of Expenditure Cycles

Creating a process for your company's expenditure cycles is a good idea, no matter how small
the business. Many small-business owners don't implement a system to track purchases
accurately. Without a clearly defined expenditure cycle, a business owner or manager must
personally approve every purchase, every invoice and every vendor. Or if you decide to just
let employees do what they want when they want, your company's expenditures could
increase significantly. Duplicate and unnecessary purchases can become common when there
is no system in place that tracks purchasing.
If you establish a system for your company's expenditure cycle, you can reduce fraud and the
potential for fraud. Putting a system in place has shown to reduce the opportunity for
embezzlement significantly. Employees can't "pay" fake or fraudulent vendors if your system
requires vendors to be pre-approved or approved before ordering. In addition, if you control
payments, employees can't write unauthorized checks. A written expenditure cycle can truly
strengthen your company's accounting and financial infrastructure.