Professional Documents
Culture Documents
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Table of Contents
Par SL Page
t No.
What is AIS
1 Revenue Process
a) Sales
b) Sales Return
c) Cash Collection
2 Expenditure Process
d)Purchase
e)Purchase Return
f)Cash Disbursement
g)Payroll
3 Conversion
i)Planning
j)Resource Management
k)Logistic
4 Administration
l)Capital
m)Investment
n)General Ledger
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An accounting information system (AIS):
Revenue
Expenditure Conversion Administration
Payroll
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1. Revenue:
Revenue process includes
a) Sales
b) Sales Return
c) Cash Collection
a) Sales process
Purchase order
Price Verification
Sales order
Credit Limit
Prepare shipment
documents
Update accounts
receivables
Update General
Ledger
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Purchase order
A purchase order (PO) is a commercial document issued by a buyer to
a seller, indicating types, quantities, and agreed prices for products or
services. Bangladeshi mans wear brand Cats eye company ltd submits
a purchase order of 500 pcs of shirt to Micro Fiber Company Limited.
Price Verification:
Micro fiber company ltd (seller) submit a price quotation of Tk 650 per
pcs to Cats eye (buyer). Buyer verifies the price and confirm the final
price at Tk 600 per pcs.
Sales order
A sales order records the customer's originating purchase order which
is an external document. The customer's PO is the originating
documents which trigger the creation of the sales order. In a
manufacturing environment, a sales order can be converted into a
work order.
Credit Limit
As a regular customer, The Cats eye company ltd gets a credit facility
of Tk 7,00,000 from Micro Fiber company ltd. After receive the PO, the
company immediately verify the buyers credit limit for future
operations.
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Update accounts receivables & General Ledger
Seller updates the accounts receivable as per the sales record and
prepare monthly statement and general ledger accounts.
Warehouse &
Inventory
Update sales
record
Update account
receivable
Update General
Ledger
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Receive goods from customer
Buyer (Cats eye company ltd) returns 50pcs of defective goods (shirt)
to the seller (Micro Fiber Company Ltd). The billing departments of
seller match the return goods with the original sales invoice while
receive.
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C) Cash collection process
Update account
receivable
Cash receive
Seller receives cash/cheque payment from buyer and prepare a cash
receipt journal while it match with the original sales invoice.
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2. Expenditure:
Expenditure process includes
d) Purchase
e) Purchase Return
f) Cash Disbursement
g) Payroll
d) Purchase:
What is purchase?
Purchase defined as “the acquisition of needed goods and services at the
optimum cost from competent, reliable sources in a timely manner.”.
Though there are several organizations that attempt to set standards
in the purchasing process and the process can vary between
organizations to organization.
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Purchase process
Where information technology is not heavily ingrained - Traditional
Purchasing processes tend to be characterized by high levels of
bureaucracy, encumbered with manual authorization (often requiring
multiple signatures independent of the order value.), slow
communications and a focus on unit price rather than long term
commodity arrangements.
The diagram below provides an example of a traditional purchasing
process.
Purchase
requisition
Authorized
purchase
requisition
Select vendor
Prepare purchase
order and send to
vendor
Receive invoice
from vendor and
Update inventory
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Update account
payable
Purchase return
(if need)
Vendor selection
The vendor selection process can be a very complicated
Purchase order
A completed purchase requisition will be reviewed and approved in the
Procurement Department according to the organization’s policy for
requisition approval. Once the requisition has been approved, it will
be used to create a Purchase Order (PO).
Receive goods
Vendor prepares to supply the goods and service to the buyer after
receives the PO. Buyer prepare a receiving record after receive the
goods.
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Update accounts payables
Buyer updates the accounts payable after the new purchase record.
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Rejected goods from customer
Document Match
Update General
Ledger
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Return goods after match with the purchase invoice and send a debit
memo to the vendor.
Identify the
invoice of due
payments
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Prepare for
payments
Payment to vendor
Update General
Ledger
Identify the vendors invoices which payment is still due and prepare
for payment.
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Payment of the vendor against the due payments after cheque sign
and update the cash records.
g) Payroll process
The payroll is the amount of money that a company pays its employees
at any given time. Sometimes every two weeks, or sometimes once
every month
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Time sheet submit
by the employee
Working hour
correction and
approve the time
sheet
Prepare payroll
register
Prepare payroll
Voucher
Transfer fund to
payroll bank
account
Update general
ledger
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Prepare payroll register & voucher
The payroll register will prepare as per the corrected working hours.
3. Conversion:
Conversion process includes
h) Planning
i) Resource Management
j) Logistics
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h) Planning
Business planning is a process that involves the creation of a mission
or goal for a company. The process of business planning can be very
broad, encompassing each aspect of the operation.
i) Resource Management
The process of using a company's resources in the most efficient way
possible is considered as resource management. These resources can
tangible resources such as goods and equipment, financial resources,
and labor resources such as employees. Resource management can
include ideas such as making sure one has enough physical resources
for one's business.
j) Logistics
Logistics is defined as a business planning framework for the
management of material, service, information and capital flows.
4. Administration:
Administration process includes
k) Capital
l) Investment
m) General Ledger
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K) Capital:
l) Investment:
m) General Ledger:
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general ledger can be supported by one or more subsidiary ledgers
that provide details for accounts in the general ledger. For instance, an
accounts receivable subsidiary ledger would contain a separate
account for each credit customer, tracking that customer's balance
separately. This subsidiary ledger would then be totaled and compared
with its controlling account (in this case, Accounts Receivable) to
ensure accuracy as part of the process of preparing a trial balance.
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