Accounting Information System

Chapter 1: The Information System: An Accountant's Perspective

The Information Environment

A Framework for Information Systems

Examples of MIS Applications in Functional Areas

Components of an AIS (6)

¤ People using the system
¤ Procedures and Instructions
¤ For collecting, processing, and storing data
¤ Data
¤ Software
¤ Information Technology (IT) Infrastructure
¤ Computers, peripherals, networks, and so on
¤ Internal Control and Security
¤ Safeguard the system and its data
General Model for Accounting Information Systems

What Makes Information Useful?

¤ . Necessary characteristics:
¤ Relevant
¤ Reliable
¤ Complete
¤ Timely
¤ Understandable
¤ Verifiable
¤ Accessible
Functional Areas of a Firm

The Role of Accountants in AIS

• Accountants are involved in both the design and the audit of AIS.
• Accountants play a prominent role on systems development teams as domain experts.
• The IT professionals on the team are responsible for the physical system.
ACCOUNTANTS AS SYSTEM AUDITORS
• Internal Audits
• Internal auditing is the appraisal function housed within the organization.
• External versus Internal Auditors
• Fraud Audits
• The Role of the Audit Committee
• Designer/Auditor Duality

Topic 2: Accounting Cycle

The Accounting System: A Conceptual Overview

The Accounting Process

Source Documents
• Identify which cycle these belong to:
– Time Cards
 – Sales Order
– Delivery Ticket
– Purchase Requisition
– AR Credit Memo
– Deposit Slip
– Purchase Order
– Receiving Report
– W4 Data (Employee Withholding Data
Sample Sales Journal

Recording and Posting to General Ledger

 Topic 3: Accounting Information System Overview
Data vs. Information
• Data are facts stored in the system
▫ A fact could be a number, date, name, and so on.
For example:
2/22/14
ABC Company, 123,
99, 3, 20, 60
The previous slide just showed facts, if we put those facts within a context of a sales invoice, for example, it is
meaningful and considered information.
Invoice Date: 2/22/14 Invoice #: 123 Customer: ABC company Item #: 99
Quantity: 3 Price: 20 dollars Total Invoice Amount: 60 dollars

Value of Information
• Information is valuable when the benefits exceed the costs of gathering, maintaining, and storing the data.
Benefit (i.e., improved decision making)
> Cost (i.e., time and resources used to get the information)
What Makes Information Useful?
There are seven general characteristics that make information useful:
1. Relevant: information needed to make a decision (e.g., the decision to extend customer credit would
need relevant information on customer balance from an A/R aging report)
2. Reliable: information free from bias
3. Complete: does not omit important aspects of events or activities
4. Timely: information needs to be provided in time to make the decision
5. Understandable: information must be presented in a meaningful manner
6. Verifiable: two independent people can produce the same conclusion
7. Accessible: available when needed
Organizational Decisions and Information Needed
• Business organizations use business processes to get things done. These processes are a set of structured
activities that are performed by people, machines, or both to achieve a specific goal.
• Key decisions and information needed often come from these business processes.

Transactional Information Between Internal and External Parties in an AIS

• Business organizations conduct business transactions between internal and external stakeholders.
• Internal stakeholders are employees in the organization (e.g., employees and managers).
• External stakeholders are trading partners such as customers and vendors as well as other external
organizations such as Banks and Government.
• The AIS captures the flow of information between these users for the various business transactions.
Interactions Between AIS and Internal and External Parties

Basic Business Processes

• Transactions between the business organization and external parties fundamentally involve a
“give–get” exchange. These basic business
processes are:
▫ Revenue: give goods / give service—get cash
▫ Expenditure: get goods / get service—give cash
▫ Production: give labor and give raw materials—get finished goods
▫ Payroll: give cash—get labor
▫ Financing: give cash—get cash
What Is an Accounting Information System?
• It can be manual or computerized
• Consists of
▫ People who use the system
▫ Processes
▫ Technology (data, software, and information technology)
▫ Controls to safeguard information
• Thus, transactional data is collected and stored into meaningful information from which business decisions
are made and provides adequate controls to protect and secure the organizational data assets.
How Does an AIS Add Value?
• A well thought out AIS can add value through effective and efficient decisions.
▫ Having effective decisions means quality decisions
▫ Having efficient decisions means reducing costs of decision making
AIS and Strategy
• An AIS is influenced by an organization’s
strategy.
• A strategy is the overall goal the organization hopes to achieve (e.g., increase profitability).
• Once an overall goal is determined, an organization can determine actions needed to reach their goal and
identify the informational requirements necessary to measure how well they are doing in obtaining that goal.
AIS in the Value Chain
• The value chain shows how the different activities within an organization provide value to the customer.
• These activities are primary and support activities.
▫ Primary activities provide direct value to the customer.
▫ Support activities enable primary activities to be efficient and effective.
Business Cycle or Business Processes
INFORMATION NEEDS AND BUSINESS PROCESSES
•Businesses engage in a variety of processes, including:
– Acquiring capital
– Buying buildings and equipment
– Hiring and training employees
– Purchasing inventory
– Doing advertising and marketing
– Selling goods or services
– Collecting payment from customers
– Paying employees
– Paying taxes
– Paying vendors

INTERACTION WITH EXTERNAL AND INTERNAL PARTIES

• The AIS interacts with external parties, such as customers, vendors, creditors, and governmental agencies.
•The AIS also interacts with internal parties such as employees and management.
• The interaction is typically two ways, in that the AIS sends information to and receives information from
these parties.
BUSINESS CYCLES
• A transaction is:
– An agreement between two entities to exchange goods or services; OR
– Any other event that can be measured in economic terms by an organization.
• EXAMPLES:
– Sell goods to customers
– Depreciate equipment
• The business transaction cycle is a process that:
– Begins with capturing data about a transaction.
– Ends with an information output, such as financial statements.
• Many business processes are paired in give-get exchanges.
• Basic exchanges can be grouped into five major transaction cycles:
– Revenue cycle
– Expenditure cycle
– Production cycle
– Human resources/payroll cycle
– Financing cycle

REVENUE CYCLE
• The revenue cycle involves interactions with your customers.
• You sell goods or services and get cash.
Give Goods Get Cash

EXPENDITURE CYCLE
• The expenditure cycle involves interactions with your suppliers.
• You buy goods or services and pay cash.
 Give Cash Get Goods

PRODUCTION CYCLE
• In the production cycle, raw materials and labor are transformed into finished goods.
Give Raw Materials & Labor Get Finished Goods

HUMAN RESOURCES/ PAYROLL CYCLE

• The human resources cycle involves interactions with your employees.
• Employees are hired, trained, paid, evaluated, promoted, and terminated.
Give Cash Get Labor

FINANCING CYCLE
• The financing cycle involves interactions with investors and creditors.
• You raise capital (through stock or debt), repay the capital, and pay a return on it (interest or
dividends).
Give Cash Get cash

o Thousands of transactions can occur within any of these cycles.

o But there are relatively few types of transactions in a cycle.

EXAMPLE: In the revenue cycle, the basic give-get transaction is:

– Give goods
– Get cash
Other transactions in the revenue cycle include:
• Handle customer inquiries • Update sales and Accts Rec. for sales
• Take customer orders • Receive customer payments

• Approve credit sales • Update Accts Rec. for

collections
• Check inventory availability • Handle sales returns, discounts, and bad
• Initiate back orders debts
• Prepare management reports
• Pick and pack orders
• Send info to other cycles
Note that the last activity in any cycle is to
send information to other cycles.
• Ship goods
• Bill customers

Transactions in the expenditure cycle:

MAJOR GIVE-GET:
• Give cash; get goods or services
OTHER TRANSACTIONS
• Requisition goods and services
• Process purchase orders to vendors
• Receive goods and services
• Store goods
• Receive vendor invoices
• Update accounts payable for purchase
• Approve invoices for payment
• Pay vendors
• Update accounts payable for payment
• Handle purchase returns, discounts, and
allowances
• Prepare management reports
• Send info to other cycles

Transactions in the HR/payroll cycle:

MAJOR GIVE-GET:
• Give cash; get labor
OTHER TRANSACTIONS
• Recruit, hire, and train employees
• Evaluate and promote employees
• Discharge employees
• Pay employees
• Process timecard and commission data
• Prepare and distribute payroll
• Calculate and disburse tax and benefit
payments
• Prepare management reports
• Send info to other cycles

• Update payroll records

Transactions in the production cycle:

• Store finished goods
MAJOR GIVE-GET:
• Accumulate costs for products
• Give labor and raw materials; Get finished goods
• Prepare management reports
OTHER TRANSACTIONS
• Send info to other cycles
• Design products
• Forecast, plan, and schedule production
• Requisition raw materials
• Manufacture products

Transactions in the financing cycle:

MAJOR GIVE-GET:
• Give cash; get cash • Pay dividends to investors and interest to
lenders
OTHER TRANSACTIONS
• Retire debt
• Forecast cash needs
• Prepare management reports
• Sell securities to investors
• Send info to other cycles
• Borrow money from lenders
•Many accounting software packages implement the different transaction cycles as separate modules.
– Not every module is needed in every organization, e.g., retail companies don’t have a production cycle.
– Some companies may need extra modules.
– The implementation of each transaction cycle can differ significantly across companies.
•However the cycles are implemented, it is critical that the AIS be able to:
– Accommodate the information needs of managers.
– Integrate financial and nonfinancial data.
TRANSACTION PROCESSING: THE DATA PROCESSING CYCLE
• An important function of the AIS is to efficiently and effectively process the data about a company’s
transactions.
– In manual systems, data is entered into paper journals and ledgers.
– In computer-based systems, the series of operations performed on data is referred to as the data
processing cycle.
• The data processing cycle consists of four steps:
– Data input
– Data storage
– Data processing
– Information output
DATA INPUT
• The first step in data processing is to capture the data.
• Usually triggered by a business activity.
• Data is captured about:
– The event that occurred.
– The resources affected by the event.
– The agents who participated.
• A number of actions can be taken to improve the accuracy and efficiency of data input:
- Turnaround documents.
• EXAMPLE: The stub on your telephone bill that you tear off and return with your check when
you pay the bill.
• The customer account number is coded on the document, usually in machine-readable form,
which reduces the probability of human error in applying the check to the correct account.
- Source data automation.
• Capture data with minimal human intervention.
• EXAMPLES:
• ATMs for banking.
• Point-of-sale (POS) scanners in retail stores.
• Automated gas pumps that accept your credit card.
How do these improve the accuracy and efficiency of data input?
- Well-designed source documents and data entry screens.

What does it mean if a document number is missing the sequence and duplicate document numbers?
- Using pre-numbered documents or having the system automatically assign sequential numbers to
transactions

- Verify Transactions

o EXAMPLE: Check for inventory availability before completing an online sales transaction.

DATA STORAGE
• Ledger
A ledger is a file used to store cumulative information about resources and agents. We typically use the word
ledger to describe the set of t-accounts. The t-account is where we keep track of the beginning balance,
increases, decreases, and ending balance for each asset, liability, owners’ equity, revenue, expense, gain, loss,
and dividend account.
– Following is an example of a ledger account for accounts receivable:

• General Ledger
• Subsidiary Ledger

• Chart of acounts
• The chart of accounts is a list of all general ledger accounts an organization
uses.
• Group coding is often used for these numbers, e.g.:
– The first section identifies the major account categories, such as asset, liability, revenue, etc.
– The second section identifies the primary sub-account, such as current asset or long-term
investment.
– The third section identifies the specific account, such as accounts receivable or inventory.
– The fourth section identifies the subsidiary account, e.g., the specific customer code for an
account receivable.
• The structure of this chart is an important AIS issue, as it must contain sufficient detail to meet the
organization’s needs.
• Journals
• In manual systems and some accounting packages, the first place that transactions are
entered is the journal.
– A general journal is used to record:
• Non-routine transactions, such as loan payments
• Summaries of routine transactions
• Adjusting entries
• Closing entries
– A special journal is used to record routine transactions. The most common special
journals are:
• Cash receipts
• Cash disbursements
• Credit sales
• Credit purchases
• Audit Trail

• When transaction data is captured on a source document, the next step is to record the data in a journal.
• A journal entry is made for each transaction showing the accounts and amounts to be credited.
If you took a principles of financial accounting class, you probably worked with journals that looked
something like this:

• You may not have gotten much experience with special journals, but in most real-world situations,
journal entries really work like this.
– Entries are originally made in the general journal only for:
• Non-routine transactions
• Summaries of routine transactions
– Routine transactions are originally entered in special journals. The most common special
journals are:
 • Credit sales
• Cash receipts
• Credit purchases
• Cash disbursements

Example:
On December 1, a sale is made to Lee Co. for $800. Lee Co. was sent Invoice No. 201.

• The general ledger account number for accounts receivable is No. 120. Lee Co. was about the 122 nd
customer, so their subsidiary account number is 120- 122.
• The next sale on December 1 was made to May Co. for $700.

• The third and final sale on December 1 was made to DLK Co. for $900.

• Suppose the company making these sales posts transactions at the end of each day. Consequently, at
day’s end, they will post each individual transaction to the accounts receivable subsidiary ledger:
– An $800 increase in accounts receivable (debit) will be posted to Lee Co.’s subsidiary account
(120-122).
– A $700 debit will be posted to May Co.’s subsidiary account (120-033).
– A $900 debit will be posted to DLK Co.’s subsidiary account (120-111).
 • Then a summary journal entry must be made to the general journal. The sales for the period are totaled.
In this case, they add up to $2,400.

• The “120/502” that appears beneath the total indicates that a summary journal entry is made in the
general journal with a debit to accounts receivable (120) and a credit to sales (502).
• The entries in the general journal are periodically (or automatically) posted to the general ledger. The
$2,400 debit to accounts receivable will be posted to the accounts receivable control account, and the
$2,400 credit will be posted to the general ledger account for sales.

• Review so far:
– When routine transactions occur, they are recorded in
special journals.
– When non-routine transactions occur, they are recorded in the general journal.
– Periodically, the transactions in the special journal are totaled,
and a summary entry is made in the general journal.
– The individual line items in the special journal are posted to the subsidiary ledger accounts.
– The items in the general journal are posted to the general ledger.
– Periodically, the balances in the general ledger control accounts are compared to the sums of
the balances in the related subsidiary accounts.

COMPUTER-BASED STORAGE CONCEPTS

• Now let’s move on to discussing some computer-based storage concepts, including:
– Entity
– Attribute
– Record
– Data Value
– Field
– File
– Master File
– Transaction File
 – Database

An entity is something about which information is stored.

• In your university’s student information system, one entity is the student. The student information
system stores information about students.
Attributes are characteristics of interest with respect to the entity.
• Some attributes that a student information system typically stores about the student entity are:
• Student ID number
• Phone number
• Address
A field is the physical space where an attribute is stored.
• The space where the student ID number is stored is the student ID field.

A record is the set of attributes stored for a particular instance of an entity.

• The combination of attributes stored for Barry Andrews is Barry’s record.

Data Value is the intersection of the row and column

• The data value for Barry Andrew’s phone number is 405-744-0236
A master file is a file that stores cumulative information about an organization’s entities.
• It is conceptually similar to a ledger in a manual AIS in that:
– The file is permanent.
– The file exists across fiscal periods.
– Changes are made to the file to reflect the effects of new transactions.
A transaction file is a file that contains records of individual transactions (events) that occur during a fiscal
period.
• It is conceptually similar to a journal in a manual AIS in that:
– The files are temporary.
– The files are usually maintained for one fiscal period.
A Database is a set of interrelated, centrally- coordinated files
• When files about students are integrated with files about classes and files about instructors, we have a
database

DATA PROCESSING
• Once data about a business activity has been collected and entered into a system, it must be processed.
There are four different types of file processing:
• Updating data to record the occurrence of an event, the resources affected by the event, and
the agents who participated, e.g., recording a sale to a customer.
• Changing data, e.g., a customer address.
• Adding data, e.g., a new customer.
 • Deleting data, e.g., removing an old customer that has not purchased anything in 5 years.

Updating can be done through several approaches:

1. Batch processing:
– Source documents are grouped into batches, and control totals are calculated.
– Periodically, the batches are entered into the computer system, edited, sorted, and stored in a
temporary file.
– The temporary transaction file is run against the master file to update the master file.
– Output is printed or displayed, along with error reports, transaction reports, and control totals.
2. Online batch processing:
– Transactions are entered into a computer system as they occur and stored in a temporary file.
– Periodically, the temporary transaction file is run against the master file to update the master
file.
– The output is printed or displayed.
3. Online, real-time processing
– Transactions are entered into a computer system as they occur.
– The master file is immediately updated with the data from the transaction.
– Output is printed or displayed.
4. The final step in the information process is information output.
This output can be in the form of:
▪ Documents- are records of transactions or other company data.
EXAMPLE: Employee paychecks or purchase orders for merchandise.
• Documents generated at the end of the transaction processing activities are known as operational
documents (as opposed to source documents).
• They can be printed or stored as electronic images.
▪ Reports- are used by employees control operational activities and by managers it make decisions and
design strategies.

• They may be produced on:

– On a regular basis
– On an exception basis
– On demand
▪ Queries - are user requests for specific pieces of information.
 They may be requested:
– Periodically
– One time
They can be displayed:
– On the monitor, called soft copy.
– On the screen, called hard copy.

Output can serve a variety of purposes:

• Financial statements can be provided to both external and internal parties.
• Some outputs are specifically for internal use:
– For planning purposes
● Examples of outputs for planning purposes include:
o Budgets- are an entity’s formal expression of goals in financial terms.
o Sales forecasts
– For management of day-to-day operations
o Example: Delivery Schedules
– For control purposes
o Performance reports are outputs that are used for control purposes.
o These reports compare an organization’s standard or expected
performance with its actual outcomes.
o Management by exception is an approach to utilizing performance reports
that focuses on investigating and acting on only those variances that are
significant.
– For evaluation purposes
o These outputs might include:
- Surveys of customer satisfaction.
- Reports on employee error rates.
ROLE OF THE AIS
• The traditional AIS captured financial data.
– Non-financial data was captured in other, sometimes-redundant systems
• Enterprise resource planning (ERP) systems are designed to integrate all aspects of a company’s
operations (including both financial and non-financial information) with the traditional functions of an
AIS.
Chapter 2: Overview of Transaction Processing and Enterprise Resource Planning Systems
Data Processing Cycle

Data Input
Steps in Processing Input are:
• Capture transaction data triggered by a business activity (event).
• Make sure captured data are accurate and complete.
• Ensure company policies are followed (e.g., approval of transaction).
Data Capture
• Information collected for an activity includes:
▫ Activity of interest (e.g., sale)
▫ Resources affected (e.g., inventory and cash)
▫ People who participated (e.g., customer and employee)
• Information comes from source documents.
Source Documents
• Captures data at the source when the transaction takes place
▫ Paper source documents
▫ Turnaround documents
▫ Source data automation (captured data from machines, e.g., Point of Sale scanners at grocery
store)
Data Storage
• Important to understand how data is organized
▫ Chart of accounts
● Coding schemas that are well thought out to anticipate management needs are most
efficient and effective.
▫ Transaction journals (e.g., Sales)
▫ Subsidiary ledgers (e.g., Accounts receivable)
 ▫ General ledger
Note: With the above, one can trace the path of the transaction (audit trail).
Audit trail for Invoice #156 for $1,876.50 sold to KDR Builders

Computer-Based Storage- Data is stored in master files or transaction files.

Data Processing
Four types of processing (CRUD):
 • Creating new records (e.g., adding a customer)
• Reading existing data
• Updating previous record or data
• Deleting data
Data processing can be batch processed (e.g., post records at the end of the business day) or in real-time
(process as it occurs).
Information Output
The data stored in the database files can be viewed
• Online (soft copy)
• Printed out (hard copy)
▫ Document (e.g., sales invoice)
▫ Report (e.g., monthly sales report)
▫ Query (question for specific information in a database, e.g., What division had the most sales
for the month?)
Enterprise Resource Planning (ERP) Systems
• Integrates activities from the entire organization
▫ Production
▫ Payroll
▫ Sales
▫ Purchasing
▫ Financial Reporting

Advantages of ERP System

• Integrated enterprise-wide allowing for better flow of the information as it’s stored in a centralized
database and can be accessed by various departments which also improves customer service.
• Data captured once (i.e., no longer need sales to enter data about a customer and then accounting to
enter same customer data for invoicing)
• Improve access of control of the data through security settings
• Standardization of procedures and reports
Disadvantages of ERP System
 • Costly
• Significant amount of time to implement
• Complex
• User resistance (learning new things is sometimes hard for employees)

Module 2 AIS
REVENUE CYCLE
 The revenue cycle is a recurring set of business activities and related information processing operations
associated with:
– Providing goods and services to customers

– Collecting their cash payments

• The primary external exchange of information is with customers.
• Information about revenue cycle activities flows to other accounting cycles, e.g.:
 The expenditure and production cycles
– Receive information about sales transactions so they’ll know when to initiate the purchase
or production of more inventory.
 The human resources/payroll cycle
– Uses information about sales to calculate commissions and bonuses.
 The general ledger and reporting function
 – Uses information produced by the revenue cycle in preparing financial statements and performance
reports.

The primary objective of the revenue cycle:

– Provide the right product in the right place at the right time for the right price.
Decisions that must be made:

– Should we customize products?

– How much inventory should we carry and where?
– How should we deliver our product?

– How should we price our product?

– Should we give customers credit? If so, how much and on what terms?
– How can we process payments to maximize cash flow?

Management also has to evaluate the efficiency and effectiveness of revenue cycle processes:
– Requires data about:
• Events that occur.

• Resources used.
• Agents who participate.
– The data needs to be accurate, reliable, and timely.

• In this chapter, we’ll look at:

– How the three basic AIS functions are carried out in the revenue cycle, i.e.:
o Capturing and processing data.
o Storing and organizing the data for decisions.
o Providing controls to safeguard resources (including data).

• Four basic business activities are performed in the revenue cycle:

1.Sales order entry
2.Shipping
3.Billing
4.Cash collection
 SALES ORDER ENTRY
Sales order entry is performed by the sales order department.
The sales order department typically reports to the VP of Marketing.
Steps in the sales order entry process include:

– Take the customer’s order.

– Check the customer’s credit.
– Check inventory availability.
– Respond to customer inquiries (may be done by customer service or sales order entry).

Steps in the sales order entry process include:

 TAKE THE CUSTOMER’S ORDER.

– Order data are received on a sales order document which may be completed and received:
• In the store
• By mail
• By phone
• On a Website
• By a salesperson in the field
The sales order (paper or electronic) indicates:
– Item numbers ordered
– Quantities
– Prices
– Salesperson

To reduce human error, customers should enter data themselves as much as possible:
– On Websites
– On OCR forms
– Via phone menus

How IT can improve efficiency and effectiveness:

– Orders entered online can be routed directly to the warehouse for picking and shipping.
– Sales history can be used to customize solicitations.
– Choice boards can be used to customize orders

• Initially popular with Dell and Gateway.

• Now used for purchases of shoes and jeans!
– Electronic data interchange (EDI) can be used to link a company directly with its customers to receive orders
or even manage the customer’s inventory.
– Email and instant messaging are used to notify sales staff of price changes and promotions.
– Laptops and handheld devices can equip sales staff with presentations, prices, marketing and technical data,
etc.

 CHECK THE CUSTOMER’S CREDIT.

Credit sales should be approved before the order is processed any further.
• There are two types of credit authorization:

– General authorization
• For existing customers below their credit limit who don’t have past-due balances.
• Credit limits vary by customer based on past history and ability to pay.

• General authorization involves checking the customer master file to verify the account and status.
– Specific authorization
 • For customers who are:
– New
– Have past-due balances
– Are placing orders that would exceed their credit limit

• Specific authorization is done by the credit manager, who reports to the treasurer.
How can IT improve the process?
– Automatic checking of credit limits and balances

– Emails or IMs to the credit manager for accounts needing specific authorization

 CHECK INVENTORY AVAILABILITY.

• When the order has been received and the customer’s credit approved, the next step is to ensure there
is sufficient inventory to fill the order and advise the customer of the delivery date.
• The sales order clerk can usually reference a screen displaying:
– Quantity on hand
– Quantity already committed to others
– Quantity on order

• If there are enough units to fill the order:

– Complete the sales order.
– Update the quantity available field in the inventory file.
– Notify the following departments of the sale:
o Shipping
o Inventory
o Billing
– Send an acknowledgment to the customer.
• If there’s not enough to fill the order, initiate a back order.
 – For manufacturing companies, notify the production department that more should be
manufactured.

– For retail companies, notify purchasing that more should be purchased.

• Accurate inventory records are needed so customers can be accurately advised of their order status.
– Requires careful data entry in the sales and shipping processes.

– Can be problematic in retail establishments:

 Clerks running a similar item over the scanner several times instead of running each
item.
 Mishandling of sales returns such that returned merchandise isn’t re-entered in
inventory records.

 RESPOND TO CUSTOMER INQUIRIES (may be done by customer service or sales order entry).
• Another step in the sales order entry process is responding to customer inquiries:
– May occur before or after the order is placed.
– The quality of this customer service can be critical to company success.
Many companies use Customer Relationship Management (CRM) systems to support this process:

– Organizes customer data to facilitate efficient and personalized service.

– Provides data about customer needs and business practices so they can be contacted proactively about
the need to reorder.

The goal of CRM is to retain customers:

– Rule of thumb: It takes 5 times as much effort to attract a new customer as it does to retain an existing one.

– CRMs should be seen as tools to improve the level of customer service and encourage loyalty—not as a way
to keep them off your back.

Transaction processing technology can be used to improve customer relationships:

 – POS systems can link to the customer master file to:
 Automatically update accounts receivable.
 Print customized coupons (e.g., if the customer just bought yogurt, print a yogurt
coupon to encourage repeat sales).
IT should be used to automate responses to routine customer requests.

Examples:
– Providing telephone menus or Websites that lead customers to answers about:
 Account balances
 Order status
 Frequently asked questions (FAQs)
 EXAMPLE: Timex includes their watch manuals
– Online chat or instant messaging.
These methods free up customer service reps to deal with less routine issues.
• EXAMPLE: Timex includes their watch manuals online, so a customer who’s missing his
manual can find out how to reset his watch when Daylight Savings Time rolls around. No
human intervention required.

The effectiveness of a website depends on its design:

– Review records of customer interactions to identify potential problems.

– A poorly-designed, difficult-to-use website can create customer ill will.

– A well-designed site can provide insights that lead to increased sales, e.g., by analyzing website traffic to
determine products of greatest interest.

 SHIPPING
The second basic activity in the revenue cycle is filling customer orders and shipping the desired merchandise

• The process consists of two steps:

– Picking and packing the order
– Shipping the order

• The warehouse department typically picks the order

• The shipping departments packs and ships the order
 • Both functions include custody of inventory and ultimately report to the VP of Manufacturing.

SHIPPING PROCESS:
– Picking and packing the order

– Shipping the order

 PICKING AND PACKING THE ORDER.

• A picking ticket is printed by sales order entry and triggers the pick-and-pack process
• The picking ticket identifies:
– Which products to pick

– What quantity
• Warehouse workers record the quantities picked on the picking ticket, which may be a paper or electronic
document.

• The picked inventory is then transferred to the shipping department.

• Technology can speed the movement of inventory and improve the accuracy of perpetual inventory records:
– Bar code scanners and RFID systems

– Conveyer belts
– Wireless technology so workers can receive instructions without returning to dispatch.
– Radio frequency identification (RFID) tags:
  Eliminate the need to align goods with scanner.
 Allow inventory to be tracked as it moves through warehouse.
 Can store up to 128 bytes of data.
• For companies that handle large volumes of merchandise, like Federal Express and UPS, RFID's ability to
reduce by even a few seconds the time it takes to process each package can yield enormous cost savings.

 SHIPPING THE ORDER.

• The shipping department compares the following quantities:
– Physical count of inventory.
– Quantities indicated on picking ticket.
– Quantities on sales order.
• Discrepancies can arise if:
– Items weren’t stored in the location indicated
– Perpetual inventory records were inaccurate.
• If there are discrepancies, a back order is initiated.
The clerk then records online:

– The sales order number.

– The item numbers ordered.
– The quantities shipped.

• This process: Updates the quantity-on-hand field in the inventory master file
Produces a packing slip.
• The packing slip lists the quantity and description of each item in the shipment.

Multiple copies of the bill of lading

The bill of lading is a legal contract that defines responsibility for goods in transit. It identifies:
– The carrier
 – The source
– The destination

– Special shipping instructions

– Who pays for the shipping

The shipment is accompanied by:

– The packing slip.
– A copy of the bill of lading.

– The freight bill.

(Sometimes bill of lading doubles as freight bill).

What happens to other copies of the bill of lading?

– One is kept in shipping to track and confirm delivery.
– One is sent to billing to trigger an invoice.

– One is retained by the freight carrier.

A major shipping decision is the choice of delivery methods:
– Some companies maintain a fleet of trucks.

– Companies increasingly outsource to commercial carriers.

• Reduces costs.
• Allows company to focus on core business.
– Selecting best carrier means collecting and monitoring carrier performance data for:
• On-time delivery.

• Condition of merchandise delivered.

Another decision relates to the location of distribution centers.
– Many customers want suppliers to deliver products only when needed.

– Logistical software tools can help identify optimal locations to:

• Minimize amount of inventory carried.
 • Meet customers’ needs.
• Also helps optimize the use of delivery vehicles on a day-to-day basis.

Globalization makes outbound logistics more complex:

– Distribution methods differ around the world in terms of efficiency and effectiveness.
– Country-specific taxes and regulations affect distribution choices.

– Logistical software can also help with these issues.

Advanced communications systems can provide real-time info on shipping status and thus add value:
– If you know a shipment will be late and notify the customer, it helps the customer adapt.

 BILLING
• The third revenue cycle activity is billing customers.
• This activity involves two tasks:
– Invoicing
– Updating accounts receivable
• Accurate and timely billing is crucial.
• Billing is an information processing activity that repackages and summarizes information from the sales
order entry and shipping activities.
• Requires information from:
– Shipping Department on items and quantities shipped.
– Sales on prices and other sales terms.

 INVOICING
• The basic document created is the sales invoice. The invoice notifies the customer of:
– The amount to be paid.

– Where to send payment.

• Invoices may be sent/received:
– In paper form.

– By EDI.
• Common for larger companies.
• Faster and cheaper than snail mail.

• When buyer and seller have accurate online systems:

– Invoicing process may be skipped.
 Seller sends an email when goods are shipped.
 Buyer sends acknowledgment when goods are received.
 Buyer automatically remits payments within a specified number of days after receiving the
goods.

– Can produce substantial cost savings.

• An integrated AIS may also merge the billing process with sales and marketing by using data about a
customer’s past purchases to send information about related products and services with his monthly statement

 UPDATING ACCOUNTS RECEIVABLE

• The accounts receivable function reports to the controller.
• This function performs two basic tasks:
– Debits customer accounts for the amount the customer is invoiced.
– Credits customer accounts for the amount of customer payments.
• Two basic ways to maintain accounts receivable:
– Open-invoice method
– Balance forward method

Open-invoice method:
 – Customers pay according to each invoice.
– Two copies of the invoice are typically sent to the customer.
• Customer is asked to return one copy with payment.
• This copy is a turnaround document called a remittance advice.

Advantages of open-invoice method:

• Conducive to offering early-payment discounts
• Results in more uniform flow of cash collections

Disadvantages of open-invoice method:

• More complex to maintain

Balance forward method:

– Customers pay according to amount on their monthly statement, rather than by invoice.
– Monthly statement lists transactions since the last statement and lists the current balance.

• The tear-off portion includes pre-printed information with customer name, account number, and
balance
• Customers are asked to return the stub, which serves as the remittance advice.

• Remittances are applied against the total balance rather than against a specific invoice.
Advantages of balance-forward method:

• It’s more efficient and reduces costs because you don’t bill for each individual sale.
• It’s more convenient for the customer to make one monthly remittance.

Cycle billing is commonly used with the balance-forward method.

– Monthly statements are prepared for subsets of customers at different times.
• EXAMPLE: Bill customers according to the following schedule:

– 1st week of month—Last names beginning with A-F

– 2nd week of month—Last names beginning with G-M
– 3rd week of month—Last names beginning with N-S

– 4th week of month—Last names beginning with T-Z

Advantages of cycle billing:
– Produces more even cash flow.
 – Produces more even workload.
– Doesn’t tie up computer for several days to print statements.

Image processing can improve the efficiency and effectiveness of managing customer accounts.
– Digital images of customer remittances and accounts are stored electronically

• Advantages:
– Fast, easy retrieval.
– Copy of document can be instantly transmitted to customer or others.

– Multiple people can view document at once.

– Drastically reduces document storage space.

Exception procedures: Account adjustments and write-offs:

– Adjustments to customer accounts may need to be made for:
• Returns

• Allowances for damaged goods

• Write-offs as uncollectible

These adjustments are handled by the credit manager.

1. If there’s a return, the credit manager:
– Receives confirmation from the receiving dock that the goods were actually returned to
inventory.

– Then issues a credit memo which authorizes the crediting of the customer’s account.
2. If goods are slightly damaged, the customer may agree to keep them for a price reduction.
– Credit manager issues a credit memo to reflect that reduction.

3. Distribution of credit memos:

– One copy to accounts receivable to adjust the customer account.
 – One copy to the customer.
4. If repeated attempts to collect payment fail, the credit manager may issue a credit memo to write
off an account.
– A copy will not be sent to the customer.
NOTE: Because accounts receivable handles the customer accounts, why does someone else have to issue the
credit memos?
EXAMPLE: An accounts receivable employee could allow a relative or friend (or even himself) to run up an
account with the company and then simply write the account off or credit it for returns and allowances.

• Having the credit memos issued by the credit manager is good segregation of duties between:
– Authorizing a transaction (write-off).
– Recording the transaction.

 CASH COLLECTION
• The final activity in the revenue cycle is collecting cash from customers.
• The cashier, who reports to the treasurer, handles customer remittances and deposits them in the bank.
• Because cash and checks are highly vulnerable, controls should be in place to discourage theft.
– Accounts receivable personnel should not have access to cash (including checks).

Possible approaches to collecting cash:

1. Turnaround documents forwarded to accounts receivable.
• The mailroom opens customer envelopes and forwards to accounts receivable either:
– Remittance advices.
– Photocopies of remittance advices.
– A remittance list prepared in the mailroom.
2. Lockbox arrangements
• Customers remit payments to a bank P.O. box.

The bank sends the company:

– Remittance advices.
– An electronic list of the remittances.
– Copies of the checks.
– Lockbox arrangements.
 Advantages:
– Prevents theft by company employees.
– Improves cash flow management.

3. Electronic lockboxes.
• Lockboxes may be regional, which reduces time in the mail.
• Checks are deposited immediately on receipt.
• Foreign banks can be utilized for international customers.

• Upon receiving and scanning the checks, the bank immediately sends electronic notification to the
company, including:
– Customer account number

– Amount remitted
4. Electronic funds transfer and bill payment.
• Customers remit payment electronically to the company’s bank.
• Eliminates mailing delays.
• Typically done through banking system’s Automated Clearing House (ACH) network.

PROBLEM: Some banks do not have both EDI and EFT capabilities, which complicates the task of
crediting the customer’s account on a timely basis.

5. Financial electronic data interchange (FEDI).

• Integrates EFT with EDI.
• Remittance data and funds transfer instructions are sent simultaneously by the customer.
• Requires that both buyer and seller use EDI-capable banks.

6. Accept credit cards or procurement cards from customers.

• Speeds collection because credit card issuer usually transfers funds within two days.
• Typically costs 2–4% of gross sales price.

PARTIAL ORGANIZATION CHART FOR UNITS INVOLVED IN REVENUE CYCLE

 VP MARKETING
 Sales Order
o Takes customer orders
o Authorizes credit for existing customer in good standing
o Checks inventory availability
 Customer Service
o Responds to customer inquiries

 VP MNUFACTURING
 Warehouse
o Picks the order
 Shipping
o Packs the order
o Ships the order
 CFO
 CONTROLLER
 Billing Department
o Invoices the customer
 Accounts Receivable
o Maintains the customer’s account:
 Increases customer account when sales are made
 Decreases account when cash is collected

 TREASURER
 Credit Manager
o Approves credit for new customer or existing customers with issues
o Authorizes credits to customer accounts for returns, allowances, and write offs
 Cashier
o Deposits cash received from customers
 THE EXPENDITURE CYCLE: PURCHASING TO CASH DISBURSEMENTS
• The primary external exchange of information is with suppliers (vendors).

• Information flows to the expenditure cycle from other cycles, e.g.:

– The revenue cycle, production cycle, inventory control, and various departments provide information
about the need to purchase goods and materials.

• Information also flows from the expenditure cycle:

– When the goods and materials arrive, the expenditure cycle provides information about their receipt
to the parties that have requested them.

– Information is provided to the general ledger and reporting function for internal and external
financial reporting.
The primary objective of the expenditure cycle is to minimize the total cost of acquiring and maintaining
inventory, supplies, and services.

Decisions that must be made include:

– What level of inventory and supplies should we carry?

– What vendors provide the best price and quality?
– Where should we store the goods?

– Can we consolidate purchases across units?

– How can IT improve inbound logistics?

– Is there enough cash to take advantage of early payment discounts?

– How can we manage payments to maximize cash flow?

Management also has to evaluate the efficiency and effectiveness of expenditure cycle processes.
– These evaluations require data about:

• Events that occur.

• Resources affected.
• Agents who participate.
– This data needs to be accurate, reliable, and timely.

Three basic AIS functions are carried out in the expenditure cycle:
– How do we capture and process data?
– How do we store and organize the data for decisions?

– How do we provide controls to safeguard resources (including data)?

The three basic activities performed in the expenditure cycle are:

– Ordering goods, supplies, and services.

– Receiving and storing these items.
– Paying for these items.

• These activities mirror the activities in the revenue cycle.

 ORDERING GOODS, SUPPLIES, AND SERVICES

• Key decisions in this process involve identifying what, when, and how much to purchase and from
whom.
• Weaknesses in inventory control can create significant problems with this process:
– Inaccurate records cause shortages.
• One of the key factors affecting this process is the inventory control method to be used.

• Alternate inventory control methods

– We will consider three alternate approaches to inventory control:
o Economic Order Quantity (EOQ)
o Just in Time Inventory (JIT)
o Materials Requirements Planning (MRP)

 ECONOMIC ORDER QUANTITY

• EOQ is the traditional approach to managing inventory.
– Goal: Maintain enough stock so that production doesn’t get interrupted.
– Under this approach, an optimal order size is calculated by minimizing the sum of several costs:
• Ordering costs

• Carrying costs
• Stock out costs
 – The EOQ formula is also used to calculate reorder point, i.e., the inventory level at which a new order
should be placed.
– Other, more recent approaches try to minimize or eliminate the amount of inventory carried.

 JUST IN TIME INVENTORY (JIT)

• JIT systems attempt to minimize or eliminate inventory by purchasing or producing only in response to
actual (as opposed to forecasted) sales.
• These systems have frequent, small deliveries of materials, parts, and supplies directly to the location
where production will occur.
• A factory with a JIT system will have multiple receiving docks for their various work centers.

 MATERIALS REQUIREMENTS PLANNING (MRP)

• MRP seeks to reduce inventory levels by improving the accuracy of forecasting techniques and carefully
scheduling production and purchasing around that forecast.

Similarities and differences between MRP and JIT

1. Scheduling production and inventory accumulation.
• MRP schedules production to meet estimated sales and creates a stock of finished goods inventory
to be available for those sales.
• JIT schedules production in response to actual sales and virtually eliminates finished goods
inventory because goods are sold before they’re made.

2. Nature of products
• MRP systems are better suited for products that have predictable demand, such as consumer
staples.

• JIT systems are particularly suited for products with relatively short life cycles (e.g., fashion
items) and for which demand is difficult to predict (e.g., toys associated with movies).
3. Costs and efficiency
• Both can reduce costs and improve efficiency over traditional EOQ approaches.

4. Too much or too little

• In either case, you must be able to:
– Quickly accelerate production if there is unanticipated demand.
– Quickly stop production if too much inventory is accumulating.

• Whatever the inventory control system, the order processing typically begins with a purchase request
followed by the generation of a purchase order.
• A request to purchase goods or supplies is triggered by either:
 – The inventory control function; or
– An employee noticing a shortage.

• Advanced inventory control systems automatically initiate purchase requests when quantity falls below the
reorder point.

The need to purchase goods typically results in the creation of a purchase requisition. The purchase requisition
is a paper document or electronic form that identifies:
– Who is requesting the goods

– Where they should be delivered

– When they’re needed
– Item numbers, descriptions, quantities, and prices

– Possibly a suggested supplier

– Department number and account number to be charged
• Most of the detail on the suppliers and the items purchased can be pulled from the supplier and inventory
master files.
• The purchase requisition is received by a purchasing agent (aka, buyer) in the purchasing department, who
typically performs the purchasing activity.

– In manufacturing companies, this function usually reports to the VP of Manufacturing.

A crucial decision is the selection of supplier.

• Key considerations are:
– Price
– Quality
– Dependability
• Especially important in JIT systems because late or defective deliveries can bring the whole system to a halt.

• Consequently, certification that suppliers meet ISO 9000 quality standards is important. This certification
recognizes that the supplier has adequate quality control processes.
• Once a supplier has been selected for a product, their identity should become part of the product inventory
master file so that the selection process does not have to be carried out for every purchase.
– A list of potential alternates should also be maintained.
 – For products that are seldom ordered, the selection process may be repeated every time.
• It’s important to track and periodically evaluate supplier performance, including data on:

– Purchase prices
– Rework and scrap costs
– Supplier delivery performance

• The purchasing function should be evaluated and rewarded based on how well it minimizes total costs, not
just the costs of purchasing the goods.
A purchase order is a document or electronic form that formally requests a supplier to sell and deliver
specified products at specified prices.
The PO is both a contract and a promise to pay. It includes:
– Names of supplier and purchasing agent

– Order and requested delivery dates

– Delivery location
– Shipping method

– Details of the items ordered

• Multiple purchase orders may be completed for one purchase requisition if multiple vendors will fill the
request.

• The ordered quantity may also differ from the requested quantity to take advantage of quantity discounts.
A blanket order is a commitment to buy specified items at specified prices from a particular supplier for a set
time period.
– Reduces buyer’s uncertainty about reliable material sources
– Helps supplier plan capacity and operations

IT can help improve efficiency and effectiveness of purchasing function.

– The major cost driver is the number of purchase orders processed. Time and cost can be cut by:

 Using EDI to transmit purchase orders

 Using vendor-managed inventory systems.
• In a vendor-managed inventory (VMI) program:

– Inventory control and purchasing are outsourced to a supplier.

 – The supplier has access to POS and inventory data and automatically replenishes inventory.
This approach:

• Reduces amount of inventory carried.

• Eliminates costs of generating purchase orders.
– Requires good controls to ensure accuracy of inventory records.

 Reverse auctions.
• Suppliers compete with each other to meet demand at the lowest price.
• Best suited to commodities, rather than critical components, where quality, vendor reliability, and
delivery performance are not crucial.
 Pre-award audits.
• Used for large purchases that involve formal bids.

• Internal auditor visits each potential supplier in final cut to verify accuracy of their bid.
• May identify mathematical errors in bid which can produce considerable savings.
– Radio frequency identification (RFID) makes it possible for companies to more accurately account for
actual inventory related cost by switching to the specific identification method for accounting for
inventories

 RECEIVING AND STORING THESE ITEMS.

• The receiving department accepts deliveries from suppliers.

– Normally, reports to warehouse manager, who reports to VP of Manufacturing.

• Inventory stores typically stores the goods.
– Also reports to warehouse manager.

• The receipt of goods must be communicated to the inventory control function to update inventory records.

The two major responsibilities of the receiving department are:

– Deciding whether to accept delivery.

–Verifying the quantity and quality of delivered goods.
• The first decision is based on whether there is a valid purchase order.
– Accepting un-ordered goods wastes time, handling and storage.

• Verifying the quantity of delivered goods is important so:

– The company only pays for goods received.
– Inventory records are updated accurately.

The receiving report is the primary document used in this process:

– It documents the date goods received, shipper, supplier, and PO number.
– Shows item number, description, unit of measure, and quantity for each item.

– Provides space for signature and comments by the person who received and inspected.
• Receipt of services is typically documented by supervisory approval of the supplier’s invoice.

When goods arrive, a receiving clerk compares the PO number on the packing slip with the open PO file to
verify the goods were ordered.
– Then counts the goods.

– Examines for damage before routing to warehouse or factory

Three possible exceptions in this process:

– The quantity of goods is different from the amount ordered;

– The goods are damaged; and
– The goods are of inferior quality.
• If one of these exceptions occurs, the purchasing agent resolves the situation with the supplier.
– Supplier typically allows adjustment to the invoice for quantity discrepancies.

– If goods are damaged or inferior, a debit memo is prepared after the supplier agrees to accept a return
or grant a discount.
• One copy goes to supplier, who returns a credit memo in acknowledgment.

• One copy to accounts payable to adjust the account payable.

• One copy to shipping to be returned to supplier with the actual goods.
IT can help improve the efficiency and effectiveness of the receiving activity:
a) Bar-coding
• Requiring suppliers to bar-code products speeds the counting process and improves accuracy.
b) RFID
• Radio frequency identification (RFID) tags eliminate the need for bar codes to be in the line of sight.
c) EDI and satellite technology
• EDI and satellite technology make it possible to track the exact location of incoming shipments and
have receiving staff on hand to unload trucks.
• Also enables drivers to be directed to specific loading docks where goods will be used.
d) Audits
• Audits can identify opportunities to cut freight costs and can ensure that suppliers are not billing for
transportation costs they are supposed to assume.

 PAYING FOR THESE ITEMS

There are two basic sub-processes involved in the payment process:
– Approval of vendor invoices
– Actual payment of the invoices

 APPROVAL OF VENDOR INVOICES

• Approval of vendor invoices is done by the accounts payable department, which reports to the controller.
• The legal obligation to pay arises when goods are received.
– But most companies pay only after receiving and approving the invoice.
– This timing difference may necessitate adjusting entries at the end of a fiscal period.

Objective of accounts payable:

– Authorize payment only for goods and services that were ordered and actually received.
Requires information from:
– Purchasing—about existence of valid purchase order.
– Receiving—for receiving report indicating goods were received.

There are two basic approaches to processing vendor invoices

1) Non-voucher system
• Each invoice is stored in an open invoice file.

• When a check is written, the invoice is marked “paid” and then stored in a paid invoice file.
 2) Voucher system
• A disbursement voucher is prepared which lists:
– Outstanding invoices for the supplier.
– Net amount to be paid after discounts and allowances.
• The disbursement voucher effectively shows which accounts will be debited and credited, along with
the account numbers.
Advantages of a voucher system:
– Several invoices may be paid at once, which reduce number of checks written.

– Vouchers can be pre-numbered which simplifies the audit trail for payables.
– Invoice approval is separated from invoice payment, which makes it easier to schedule both to
maximize efficiency.

 ACTUAL PAYMENT OF THE INVOICES

• Payment of the invoices is done by the cashier, who reports to the treasurer.
• The cashier receives a voucher package, which consists of the vendor invoice and supporting
documentation, such as purchase order and receiving report.
• This voucher package authorizes issuance of a check or EFT to the supplier.

Processing efficiency can be improved by:

 Requiring suppliers to submit invoices by EDI.
• Referred to as Evaluated Receipt Settlement.
• Payments are issued based on what is ordered and received.
Requires that:
– Suppliers quote accurate prices when orders are placed.
– Receiving personnel count accurately and inspect merchandise received.
• Typically, incorporates very timely communications about shipments and receipts.
 Having the system automatically match invoices to POs and receiving reports.
 Eliminating vendor invoices.
 Using procurement cards for non-inventory purchases.
 Using company credit cards and electronic forms for travel expenses.
 Preparing careful cash budgets to take advantage of early-payment discounts.
 Using FEDI to pay suppliers.
PARTIAL ORGANIZATION CHART FOR UNITS INVOLVED IN EXPENDITURE CYCLE

 VP MANUFACTURTING
 Purchasing
o Selects suitable suppliers
o Issues purchase orders

 Receiving
o Decides whether to accept deliveries
o Counts and inspects inventories

 Inventory Stores
o Stores goods that have been delivered and accepted

 CFO
 CONTROLLER
 Accounts Payable
o Approves invoices for payment
 TREASURER
 Cashier
o Issues payment to vendors
SAP Business One on Cloud – Accounting Information System

CHAPTER 1: SAP BUSINESS ONE ON CLOUD PLATFORM AND

ENTERPRISE RESOURCE PLANNING (ERP) SYSTEM
Cloud computing represents a new way to deploy computing technology to give users the ability to access,
work on, share, and store information using the internet.
- The ideal way to describe Cloud Computing would be to term it as 'Everything as a Service'
- cloud itself is a complex network of data centers, each composed of thousands of computers working
together that can perform and achieve the functions of a software on a personal or business computer units by
providing users access to a vast number of applications, platforms and services delivered over the Internet.

Types of Cloud Deployment

PRIVATE CLOUD
- Also known as Internal Cloud
- Cloud based infrastructure operated exclusively for a single organization with all data protected behind an
internal firewall.

- Usually physically located at the company's on-site data center or can also be managed and hosted by a third-
party provider.

PUBLIC CLOUD
- Also known as External Cloud

- Available to the public where data are created and stored on third-party servers. Service infrastructure
belongs to service providers that manage them and administer pool resources.
- The need for user companies to buy and maintain their own hardware is eliminated.

- It is based on a shared cost model for all the users or in the form of a licensing policy such as pay per use.

HYBRID CLOUD
- encompasses the best features of the above-mentioned cloud computing deployment models.
- allows companies to mix and match the facets of public and private cloud that best suit their requirements.
 Huawei Cloud Platform

Huawei Cloud is the chosen partner of FastTrack IT Academy for the deployment of SAP Business One on
Cloud to our university and collegiate partners. Huawei Cloud now distills 30+ years of accumulated
technology, innovation, and expertise in the ICT infrastructure field to offer customers everything as a service.
You can grow your enterprise in the best environment with stable, secure, and ever-improving Huawei Cloud
services and affordable, inclusive AI. It provides a powerful computing platform and easy-to-use development
platform to support Huawei's full-stack, all-scenario AI strategy. By the end of 2019, Huawei Cloud had
launched 200+ cloud services and 190+ solutions. News agencies, social media platforms, law enforcement,
automobile manufacturers, gene sequencing organizations, financial institutions, and a long list of other
industry customers are all benefiting in significant ways from Huawei Cloud. 3,500 applications were added to
the Huawei Cloud marketplace with offerings from more than 10,000 business partners.

Capabilities and User Experience

Key Features of Cloud Computing
The characteristics of Cloud Computing express its significance in the current business market. It has already
been proven that Cloud Computing is a model for enabling universal, convenient and on- demand network
access.
Key features of Cloud Computing:
• Agility -helps in rapid and inexpensive re-provisioning of resources
• Location Independence - resources can be accessed anywhere (except on limitations set by company's
internal control)

• Multi-Tenacity - resources are shared amongst a large pool of users

• Reliability - dependable accessibility of resources and computation
• Scalability - dynamic provisioning of data helps in avoiding various bottleneck scenarios
• Ease of Maintenance - users (companies/organizations) have less work in terms of resource upgrades and
management, handled by service providers of cloud computing

INTRODUCTION TO SAP

SAP (stands for Systems, Applications and Products in data processing) is a European multinational
software corporation founded in 1972, headquartered in Walldorf, Baden- Wurttemberg, Germany with
regional offices in 180 countries.

 FOUNDED BY FIVE IBM ENGINEERS

- Haso Plattner
- Klaus Tschira
- Claus Wellenreuther
- Dietmar Hopp
- Hans-Werner Hector

 SAP IS CONSIDERED AS OF THE WORLD’S LARGEST BUSINESS SOFTWARE

COMPANY:
• Commands 67% share of the Business Software Market

• 12 Million Users. 95,000 Installations in more than 130 countries

• 1,500 Partners. 25+ Industry Solutions. 60,000 employees
  RECOGNIZED LEADER IN PROVIDING COLLABORATIVE BUSINESS SOLUTIONS FOR
ALL TYPES OF INDUSTRIES AND FOR EVERY MAJOR MARKET GLOBALLY.

SAP Business One is an ERP (Enterprise Resource Planning) Solution. It is arranged into 15 functional modules,
automating the major functions in a business organization. This system prides itself on having the following
characteristics:
• Integrated
• Real-time
• Flexible
• Easy to use

Benefits
SAP Business One: On Premise vs. On Cloud

To be able to provide our partners with the most recent business solution trends in the industry, we have
decided to open the doors on the latest cloud computing developments, thus offering SAP Business One on
Cloud.

WHAT IS ENTERPRISE RESOURCE PLANNING (ERP)?

Enterprise Resource Planning (ERP)
– Business management software that allows an organization to use a system of integrated applications to
manage the business.
– Aims to serve as a backbone for your whole business.
– integrates all facets of an operation, including product planning, development, manufacturing
processes, sales and marketing
The leader in ERP market share, and the one that invented the market to an extent, is the German company
SAP AG with its R/3 software. Other big players include PeopleSoft Inc., Oracle Corp., Baan Co. NV and
J.D.Edwards& Co.
 CHAPTER 2: GETTING STARTED
Log-in to SAP Business One
1. Open any web browser (e.g. Google Chrome, Mozilla Firefox, Microsoft Edge,etc)

- If you are using your mobile phone, don’t forget to enable ‘Desktop Site’ option first before entering the
webpage, in order to view the user interface of SAP Business One properly.
2. Input on the address bar of the web browser the URL provided by your instructor.
3. Press Enter.
4. You will be directed to the SAP Business One log-in page
5. Select the company that will be provided by your instructor.
6. Log-in using the User ID and Password provided below, depending on the branch assigned to you,
refer to the EXCEL FILE that is provided by your instructor.
7. Don’t forget to select your branch and click ‘Set as Default’ on the Select Default Branch window.

USER INTERFACE
Menu Bar and Tool Bar
The SAP Business One menu bar displays at the top of the screen. The menu bar contains
theWindowsstandard menu (File, Edit, Wwindow, Help) as well as generic SAP Business One functions.
The toolbar displays under the menu bar. The toolbar is a collection of icon buttons that grant you eas access
to commonly-used functions. The functions represented by the buttons are also available in the menu bar.

Modules Menu
Navigation in SAP Business One is done using the Modules Menu. It arranges the functions of the individual
applications in a tree structure.
The Modules Menu contains a list of all modules with their related options.
The menu option includes:

• Are arranged in the same order as the menus in the Main Menu
• Cannot be modified
• May be inactive for unauthorized users

User and Password Maintenance

The users of SAP Business One are defined in the User-Setup window.

To change the name of the user:

1. Go to the tool bar and click (My Personal Settings). User Set-up window will appear.
Note: For mobile users, go to Modules Menu > Administration > General > Setup > User.

2. Change the name on the User Name field with your own name.
3. Personalize your password by clicking beside the Password field.
4. Input the old password, then input your personalize password on Password field and Confirm field.
5. Click OK.
6. Click Update

Branch Name Setting

1. Go to Administration > Setup > Financials > Branches
2. Branches Setup window will open. Look for the branch assigned to you then change the Branch Name
and Branch Name (Foreign) with your own name.
3. Update.
Basic Customization
Note: This is for discussion purposes only. Only the instructor will perform this customization.

To set how certain parameters are displayed in SAP Business One on Cloud:
1. Go to Administration>System Initialization>General Setting
2. On the Display tab, choose the following settings:

Language: English (United States)

Time Format: 12H
Date Format: MM/DD/YYYY

3. Click UPDATE to save the settings. Click OK to exit the window.

*Note: Font Size and Font Style is predefined on SAP Business One on Cloud and cannot be changed. If you
want to increase the font size, directly increase zoom % of the browser that you are using.

CHAPTER 3: MASTER DATA AND DOCUMENT HANDLING

SAP Business One tracks business activities using documents such as purchase orders, invoices, production
orders, sales orders, and so on. Each of these documents is constructed from smaller reusable chunks of data
called master data. Creating documents from master data increases productivity, ensures data consistency, and
reduces errors.

Master data refers to the key information that describes your customers, vendors, and leads as well as items
that your company buys and sells.
It is easy to look up business partner and item information while you are entering sales and purchasing
documents. A selection list icon is available in the business partner and item number fields in marketing
documents. Use the selection list icon to make a selection list appear. You can scroll through the list or use
characters with wildcards to search.

Types of Master Data

Most software systems have lists of data that are shared and used by several of the applications that make up
the system. For example, a typical ERP system as a minimum will have a Customer Master, an Item Master,
and an Account Master. This master data is often one of the key assets of a company.
Both Financial Accounting and Purchasing use vendor master data. General data and data relevant to both
departments is stored in shared master records to avoid duplication.

Searching the Master Data List

One can show all the inventory items inside the master data list by placing an asterisk (*) in the item number
or description field. The same procedure applies for business partner master data, you can just type asterisk (*)
in the BP Code field.

However, you can do a wild card search by placing the asterisk (*) before, after or in the middle of the word
that you want to search. The list would show all items that contains the particular string that you used.
You could also find specific information by typing in the word or number that you are looking for in the
particular field.
Business Partner Master Data

Each customer, vendor, or interested party is entered in the system as a master record. Use the Business
Partner Master Data to record and retrieve business partner (customers, vendors, and leads) information and
schedule business partner activities.
Business partner information typically includes:

• Company details, including addresses and telephone numbers

• Business partner contact persons, including telephone numbers and E-mail addresses
• Logistic details
• Tax information
• Accounting information
• Details of payment terms
The information you enter in a master record for a customer or a vendor in the system is applied automatically
when you process your business transactions, for example, the terms of payment that you define for a
customer. These then form the basis of the orders and invoices for this customer. You can also use the data to
analyze your business partner relationships in detail.
How to Create a Business Partner Master Data
Go to Modules Menu > Business Partners > Business Partners Master Data. Business Partner Master Data
window will open

1. Business Partner Master Data window will open. Switch to find mode by clicking the
(Add) in the tool bar or simple press Ctrl + A in your keyboard.

2. On the Business Partner Master Data header, input the following

information: Code : V1000
BP Type (Dropdown list): Vendor
Name : 1128 Appliance Center
Alias Name : Branch 1 (or the branch assigned to
you) Group : Appliance

Note: If Business Partner Group is not available as an option on the list, click Define
New.

3. You can input additional information on the General tab, Contact Persons, Addresses,
Payment Terms, etc.
4. Click Add
Item Master Data
SAP Business One, therefore, provides optimum support for your business processes. In
Sales, it helps you create orders, delivery notes, and outgoing invoices because prices, sales units
and gross profit calculate automatically. Using the item data in the system, you can optimize
stockholding. You have complete control over stock quantities at all times and can also
analyze the financial aspects of stockholding at the same time. The system allows you to control
production based on the items that are used for production and based on the finished product and
any by-products created.

Use the general area to maintain general item information relevant for all types of items.
The Item Master Data consists of the general area and seven tabs. Each tab enables you to manage
sales and purchase items, warehouse items, and planning data for MRP and Production.
How to Create an Item Master Data
1. Go to Modules Menu > Inventory > Item Master Data
2. Item Master Data window will open. Switch to find mode by clicking the (Add) in the
tool bar or simple press Ctrl + A in your keyboard.
3. Input on the following
information: Item No: A1000
Description: Linens
Item Group:
Consumables Unit
Price: 60
4. Go to Inventory Data Tab
5. Input the following information:
Warehouse Code 01
Warehouse Name : General Warehouse
6. Click Add
 7.

Document Handling

General Structure of Marketing Documents

All the documents in purchasing and in sales share a similar structure. The documents
for sales and purchasing are also often called “Marketing Documents”. Much of the data appearing
in these tabs defaults from the master data. The values can be changed while working in the
documents. These changes will affect the document, but do not change the master data records.

In general the document is divided into:

1. The upper part (header) with the general information,
2. The middle part with the information on different tab pages and the item specific data
(you can access more item specific data in the line details by double-clicking a row),
3. The lower part (footer) with more general information.

The middle part contains three tabs:

a. The Contents tab is where all the specific information about the ordered items or services
is entered, such as quantity, price, item number, and description
b. The Logistics tab contains the details about where the items or services as well as
 payments are to be sent. Shipping method is also specified here. Most of the data is pulled
from preconfigured master company details and vendor data.
The Accounting tab contains the relevant general ledger (G/L) account information for the purchase pulled
from the financial accounting mastered

FINANCE CYCLE
Chart of Accounts

The Chart of Accounts is organized by drawers and levels.

The organization of the chart of accounts follows GAAP (Generally Accepted Accounting
Principles) in which there is a separate “drawer” for accounts representing: Assets, Liabilities,
Equity (Capital and Reserves), Revenues (Turnover), Cost of Sales, Expenses (Operation Costs),
Financing (Non-Operating Income and Expenditure), and Other Revenues and Expenses
(Taxation and Extraordinary Items). These drawers, which have been defined by SAP and cannot
 be changed, organize your accounts by level in a logical fashion appropriate to your financial
accounting and reporting processes.

In the General Ledger, we distinguish between Balance Sheet Accounts and Income Statement
Accounts, also called Profit and Loss Accounts.

BALANCE SHEET ACCOUNTS:

 The first 3 drawers: Assets, Liabilities, Equity (Capital and Reserves) hold the
Balance Sheet Accounts, such as the Sales Tax account and the Accounts Payable
Account.
 The bookkeeping balance of these accounts is kept from one fiscal year to the next.
 The Balance Sheet Accounts – reflect the monitory value of the company - stock, assets, etc.

PROFIT AND LOSS ACCOUNTS:

 The last 5 drawers: Revenues (Turnover), Cost of Sales, Expenses (Operation Costs),
Financing (Non-Operating Income and Expenditure), and Other Revenues and Expenses
(Taxation and Extraordinary Items) hold the Profit and Loss Accounts, such as the
Income Accounts. Note that in some localization, the lower drawers are not all profit
and loss account drawers.
 The bookkeeping balance of these accounts has to be cleared at the end of each fiscal year –
This is the Period End Closing process (will be discussed in Unit 4: Financial Periods Process).
  The Profit and Loss Accounts - reflect the changes in the company value, such as: sell
stock – cost of goods sold, increase revenues.

REPORTS:
 Financial reporting requirements drive most of the initial settings and configuration decisions.
 The different financial reports run on the account balances relevant to a selected date
range and present them according to their drawer, level and type:

The Balance Sheet - summarizes the value of the business assets liabilities, and owner’s
equity accounts.
The Trial Balance - details for each account: beginning balance for a particular period, all
of the debits and credits, and the ending balance.
Profit and Loss Statement – after the end of the fiscal year, the balances of the expense
accounts will be subtracted from the balances of the revenue accounts to come up with the
profit or the loss for the fiscal year.

A chart of accounts arranges a company's general ledger accounts in a hierarchical structure.

The top level in the structure (level 1) consists of sections or groups for different type of
accounts (assets, liabilities, capital and reserves, turnover, and so on). The number of account
groups depends on the localization that was selected when the company was created and cannot
be modified by the user.

The system displays the section as a cabinet drawer (see figure). Each drawer has a section title,
which you cannot change. The system displays lower-level titles in blue and normal active
accounts in black. Accounts that you have entered in the G/L Account Determination (default
accounts) are displayed in green.

Levels 2 through 9 can contain either active accounts or titles that combine several active accounts.
 Level 10 only contains active accounts.

Because only active accounts can be posted to in SAP Business One, it is a good practice to
have all your active accounts at the same level.

In reports, a title account summarizes all the balances of each active account below it.

Viewing Chart of Accounts

To view existing Chart of Accounts
Go to (1) Financials → (2) Chart of Accounts

Editing Chart of Accounts

To edit (add, modify, update) Chart of
Accounts Go to (1) Financials → (2) Edit
Chart of Accounts
3. Tick the box beside the Chart of Account drawer that you want to edit
4. Click OK.
5. Click on Add Same Level Account or Add Sub-level Account.
6. Input the necessary information of the Account to be added.
7. Click OK.
 Posting Periods

When you create a new company database, you create the posting periods for the first fiscal
year. Posting periods split the fiscal year into sub-periods. Sub-Periods are created automatically
by SAP Business One in the fiscal year. The available sub-periods are:

Year (one sub-period)

Quarters (four sub-
periods) Months (twelve
sub-periods)
Days (any number of sub-periods)

Using this information, the system automatically creates the corresponding number of
posting periods. You can change these periods, if necessary.

The first posting period must be defined at the time the company database is created.
Afterwards, to set up new posting periods, go to:
(1) Administration → (2) System Initialization → (3) Posting Periods.
4. On the lower right corner of the Posting Periods window, click ‘New Period’.
5. Input the necessary information of the Period to be added.
6. Click Add.
7. Click OK.
 From here you can update the generated periods (such as date ranges) and create new
ones (by choosing New Period). You can also set or change the start of the fiscal year.

You can create posting periods for future fiscal years at any time.

Journal Entry

In SAP Business One, a journal entry is automatically posted from many documents, such as A/R
and A/P invoices. Additionally, you can manually post a journal entry directly to a G/L account
or to a business partner sub-ledger account.

All journal entries are posted to one file in SAP Business One – the Journal Entries file. You can
set various defaults for journal entries. You can also change some document settings for an
individual journal entry.

Header:
• In automatic journal entries created by the documents in SAP Business One, the fields are
filled automatically from the document fields. In manual journal entries you set the values:
• The system automatically enters a number in the document header. This number is
incremented with every transaction. You can define numbering series for journal entries on the
Document Numbering screen, under the Administration → System initialization →
Document Numbering.

The three dates in the header default to the current system date but you can change them:
o Posting Date. This date determines the posting period and therefore the fiscal period for
financial reporting. You can post to an earlier or later date if the posting period is Unlocked
for posting.
o Due Date. The date the transaction is due.
o Document Date. The date used for tax reporting purposes.
You can use the Ref. 1 and Ref. 2 fields to enter references to associated actual documents.

You can also classify the document using a transaction code, for example, as an accrual/deferral
document, depreciation document, or value adjustment document.
Choose Administration → Setup → Financials → Transaction Codes to maintain the
transaction codes. The system copies the description of the transaction code to the Details field.
Posting Tools
You can post a Journal Entry by:

o Entering a manual journal entry.

o From a journal voucher
o Using a recurring postings
o Using a posting template

Non-Routine Transactions

Manual Journal Entry

To record a manual Journal Entry:
Go to (1) Financials → (2) Journal Entry
3. On the Remarks field, input a brief explanation for the Journal Entry being made.
4. On the G/L Account field, click the Pick List button.
5. List of Accounts window will open, select the Account affected by the Journal
Entry being made.
6. Click Choose.
7. Input the amount on either the debit/credit side, depending on the nature of
the transaction.
8. Add.
Note: Journal Entries created in this manner are not editable once added.
Journal Voucher

SAP Business One offers a two-stage procedure for creating journal entries. You can create the
journal entries as drafts first, correct and post them later.

When the user is creating a journal voucher it is used for storing several journal entry drafts. You
can change journal voucher as long as they have not been posted yet. Then, you can access the
journal voucher, make any necessary corrections, and post the entire journal voucher. You do not
have to post each journal entry individually. If you do want to post the journal entries individually,
however, you must create a separate journal voucher for each journal entry draft.

You can save an unbalanced journal vouchers as long as it is in the draft mode.

To create, change and post journal vouchers, choose (1) Financials → (2) Journal Vouchers

→ (3) Add Entry to New Voucher

 4. A Journal Voucher Entry window will appear, and the you can input the information just
like in the manner of a Manual Journal Entry. Click Add to Voucher.

5. Double click the Voucher if you want to edit it contents. You can also remove a journal
voucher or delete an entry from a journal voucher, as long as they have not been posted
yet. Right-click the journal voucher row, select Remove Journal Voucher.

6. Click Post Voucher.

The main purpose of Journal Vouchers is to allow parking of Journal Entries that is still subject to
supervisor’s approval.
Routine Transactions

Recurring Postings
SAP Business One features a recurring postings function for similar, fixed amount journal entries
created on a regular basis. Choose Financials → Recurring Postings to enter and maintain
recurring postings.

Recurring postings use a template that is stored with a code and a description. In this template, you
define (among other things) the frequency in which the journal entry is supposed to be created and
until when the recurring posting is valid. The possible entries in the Frequency field include:

Daily, Weekly, Monthly, Quarterly, Half-Yearly, Annually: You must also

specify the next execution date for these entries.
One time: Although a one-time recurring posting seems a bit odd, it serves a special
purpose.
With this you can schedule a journal entry for a specific date.
Template: Journal entries that you need repeatedly but not on a regular basis can
be created as this type. You can access these templates from the manual journal entry. To
do so, you must specify Recurring Posting in the Template Type field.
Not executed yet: If you do not need the recurring posting at present, you can turn
it off with this entry.

In the Valid To field, you can enter a date until which the recurring posting is valid and will be
executed by the system.

The system duplicates the original recurring posting (instance 0) every time the execution date
arrives. Once you use this instance and add it to the system, it will be deleted.

You can display a list of all the recurring postings in the system. You can then adjust these
postings and confirm them. You can also configure the system so that the execution list is displayed
automatically in the execution date as soon as you log on. Choose Administration → System
Initialization → General Settings and select the Display Recurring Postings on Execution
indicator on the Services tab to activate this service for your user.

You can add recurring postings to the cash flow, which appear in green in the report.

Example: The company pays a 10,000 Repairs and Maintenance fee for its Office Building every
17th of the month, for 1 year. Use the following information:
Code: RAME Description: Repairs and Maintenance
Fee Dr. Repairs and Renewals 10,000
Cr. Petty Cash 10,000
To create the recurring posting:
Go to (1) Financials → (2) Recurring Postings
3. Input the code and description
 4. Input the recurring Journal Entry
5. Set the frequency and validity.
6. Click Add.

The recurring posting will appear upon log-in on the specified day of the month. Select the
recurring posting and click Execute.

Posting Template
You can create posting templates for journal entries that have a very similar structure. These
templates can contain account numbers but you can also just specify an account description in
a line item if you do not yet know which exact account will be used for this line item.

Instead of fixed amounts, only percentages are entered here. These percentages indicate how
the total amount is distributed among the line items.
The illustration shows an example of how you can allocate out a utility expense, like the
electric bill, to its component expenses at a specific percentage rate.

The posting template is stored under a code and with a description.

Choose ( 1 ) Financials → (2) Posting Templates to enter and maintain posting templates.
3. Input the following information
Code: PRE Description: Allocation of
Prepayments Dr. Property Rent 70%
Dr. Premises Insurance 30%
Cr. Petty Cash 100%
4. Click Add.

5. When you enter a journal entry manually, choose Percentage in the Template Type
field and enter the template code in the Template field or press tab and choose it from
a list.
6. Enter an amount in one of the line items and the template will allocate the amounts
to the other lines based on the percentage rate.
Posting Period Process

At the end of a period (month, quarter, or year), you must transfer the balances of the P&L
accounts to a retained earnings account.

Choose (1) Administration → (2) Utilities → (3) Period-End Closing to run Period-End Closing.

4. With the Period-End Closing function, you can choose P&L accounts and periods, and
specify a retained earnings and period-end closing accounts.

5. When you execute the period-end closing, the system generates a list of proposals for
closing entries. You can accept each proposal individually.
 After you accept the proposals, the system transfers the account balances from the Expense and
the Revenue accounts to the Period-End Closing account on the same day (the last day of the
period). This sets the accounts balances to zero.

At the same time but with the first day of the following posting period as posting date, the system
transfers the balances form the Period-End Closing account to the Retained Earnings account
(the Period-End Closing is a clearing account).

Two transactions are created for each account and two journal entries are automatically created to
reflect those transactions.

Now, the Retained Earnings account, which is a Balance Sheet account, contains the total brought
forward cumulated profit.

Journal Entries posted by the Period-End Closing Utility have the origin “BC”.

Note that you can store the results initially as a report and then post them at a later stage.

If you make postings after entering the balances carried forward, you need to repeat the period- end
closing routine to include these subsequent postings
 SAP B1 on Cloud – Basic Troubleshooting

Level 1
Errors or technical issues outside the control of FIT Academy.
 Hardware/device issues
 Connectivity issues
 And any other issues outside the SAP system

Level 2
Errors or technical issues supported by FIT Academy.
User End
1. Incorrect User Name and Password

Reason 1: Wrong input of user name and password.

Solution 1: Input the correct user name and password carefully. Remember that both are
case sensitive and take note of special characters.

Reason 2: Wrong database/company selected.

Solution 2: Select the correct database/company.

Reason 3: Can’t remember the new password.

Solution 3: Reset password using the manager account.

(1) Instructor must log-in on the manager account

(2) Go to My Personal Settings on the tool bar, user set-up window will appear
 (3) Switch to Find Mode (Ctrl + F)
(4) Input the user ID of the student on the first field (ex. Student 1, Student 2, etc)
(5) Click Find
(6) Go to Password
(7) Set new password to 1234
(8) Click Update on the Password window
(9) Click Update on the user-setup window
(10) Let the student try again using the new password

2. Locked User

Reason 1: Too many failed attempts in logging in. After 5 times of trying to log-in with the
incorrect password, the user will be locked.
Solution 1: Unlock the student account using the manager account
(1) Instructor must log-in on the manager account
(2) Go to My Personal Settings on the tool bar, user set-up window will appear
(3) Switch to Find Mode (Ctrl + F)
(4) Input the user ID of the student on the first field (ex. Student 1, Student 2, etc)
(5) Click Find
(6) Go to Lock User, make sure to uncheck it.
(7) Click Update on the user-setup window
(8) Let the student try to log-in again
3. Application Quits or Request timed-out

Reason 1: Sudden internet disconnection

Solution 1: Double check your internet connection then open SAP. Do not simply
reload or refresh the website, you have to enter the link again.

Reason 2: Application idle for 60 minutes

Solution 2: Log-out of the system if you are not using it

4. Invalid SAML2 SSO request reference token

Reason 1: Did not properly logged out previous session (simply closed the browser, clicked
back to log out, transferred to another site without logging out). To properly log
out go to Menu Bar > File > Exit.

Solution 1: Close SAP tab > Go to Browsing History of your browser > Clear Cache and
Cookies > Open New Tab > Enter SAP Link

Solution 2: If clearing cache and cookies, did not work > Contact FIT Academy
 Server End
1. Stuck at Please Wait page upon logging in

Solution: Contact FIT Academy

2. Server unavailable

Solution: Contact FIT Academy

SAP Business One Introduction Digitalization for Your Business

Introduction to SAP Business One

Why explore ERP system?

As your business changes, a solid underlying foundation is critical
It‘s time to go digital
 You want to make the right business decisions at the right time, with real-time access to information
 You need to automate your business processes, to increase productivity
You are growing
 You are a fast growing company, and your needs are out-pacing your current system capabilities
 As your business grows, you need to put best-practice processes in place
You are expanding
 If you are expanding into new markets, you need business software that will enable you, not hinder you
 Enable your subsidiary network to harmonize business and intercompany processes
Run your Business with a Digitized ERP Solution
Keep your focus on running your business!

Competitive Advantage
 Become relevant in the global economy by implementing robust business process, allowing
you to adapt to market changes, and anticipate business trends

Connect Business Functions

 Your entire business runs more smoothly by touching all business areas which assists by
natural cross departmental collaboration within your organization

Easy Access to Data

 Analytics and reports helps you to keep informed about your business to make decisions on the
back of real-time data insights

Digital Business – Enablers

Digital business is built on new computing infrastructure – the enablers are…
– Analyctics
– Big data
– Cloud Technologies
– Mobile Technologies
…accelerated by the Internet of Things (IoT), advances in Machine Learning and innovations like
Blockchain
These technologies give your company the ability to change your business models, and create new
products and services in the digital economy

The Digital Core For SMEs

Enhanced by the Digital Enablers

Additional Elements for SAP Business One

– SAP Business One used in more than 170 countries
– Countries localization (50)
Integration Options for SAP Business One
Connecting your business networks

Integration Scenarios (integral part of the SAP Business One solution) Integration framework as
development environment as well as runtime for predefined integrations,
– such as Dashboards, mobile apps, outsourced payroll, automated request for quotation,
SAP Customer Checkout, web services, other SAP and non-SAP applications

Subsidiary Integration (dedicated integration solutions out-of-the-box) Integrates SAP Business One
running in subsidiaries* with SAP Business Suite software in headquarters’ location
– Data harmonization, financial consolidation, business process standardization, and supply
chain optimization
– Preconfigured scenarios for master data, sales, purchasing, HQ reporting, and finance as
well as customer-specific content

Integration Hub (ready-made integration scenarios) Preconfigured templates to integrate cloud-based

business applications and services, such as
– Shopify, Magento, Aramex, DHL, FedEx, UPS, Fixer, Mailchimp, SendGrid, Nexmo,
Expensify, automated request for quotation
Intercompany Integration Solution (dedicated application out-of-the-box) Integrates different SAP
Business One databases in a seamless and easy to consume way

– Streamline and automate intercompany transactions and processes, such as master data
distribution and financial consolidation

Industry-specific Solutions
Extend to meet your specific business and industry challenges
Software solution partners have the industry expertise and customer focus to offer industry-specific
and horizontal solutions

Industry Solutions - on premise

– Automotive
– Consumer Products
– Engineering
– Food & Beverage
– Healthcare
– High-tech
– Industrial Machinery/Components
– Retail
– Wholesale Distribution
Key Benefits - cloud
– Easy and affordable deployment
– Secure browser-based access from anywhere, at any time
– Access to the most up-to-date functionality without having to use rely on in-house IT
resources to maintain the solution
– Subscription licensing avoiding capital expenditure and allowing for operational expenditure
flexibility
– Manage your most critical business functions in your Web browser.

Make Real-Time Business Decisions with Apps…

Support your business decisions with accurate information
SAP HANA Apps

§ Enterprise Search
Find any information within your organization, just like searching on an internet search
engine!
§ Cash Flow Forecast
Make informed decisions instantly, ensuring healthy liquidity ratios
§ Available-to-Promise
Interact with current and future stock levels to ensure you can satisfy your customer
demands
§ Delivery Schedule Management
Prioritize customers’ orders via a drag-and-drop interface, ensuring on-time delivery
§ Intelligent Forecast
Implement lean inventory management techniques thus improving efficiency and increase
profits
§ Sales Recommendation
Suggest other items on-the-fly based on historical buying patterns of the customer and items

…and Analytics
Support your business decisions with accurate information

Analytics and Reporting

– Interactive Analysis
Create flexible ad-hoc analysis within the familiar Microsoft Excel
– Pervasive Analytics Designer
Customize and create new analytics, amplifying the end user experience
– Dashboards and Advanced Dashboards
 Embed across all business forms and functions empowering end users with up-to-the-second
information
– Key Performance Indicators (KPIs)
Track business-critical measures
– Cockpit
Visualize all analytics in your user specific SAP Business One Desktop
– Excel Report Designer
Create predefined Microsoft Excel reports with a real-time connection to your business data
– Analytical Portal
Run and schedule Crystal Reports and Excel Reports in real time through a web browser
– Semantic Layer
Aiding end users to access information freely using common business terms
– SAP Crystal Reports
Generate and create feature rich and interactive reports with the embedded

Launch the Web Client

… And optimize user experience

The Web Client

– Is based on SAP Fiori design principles encapsulating SAP Business One core processes and
business logic
– Focuses on creation, processing, and updating of Sales Quotations, Sales Orders, A/R
Deliveries, and A/R Invoices
– Supports creation and update of items, business partners, and activities
– Provides sophisticated analytic charting capabilities
– Can be launched in either a desktop computer or tablet; or directly from the SAP Business One
desktop application

Run your Business with native Apps

Access important business data from any location at any time

Mobile Apps

Key Benefits
– Instant access for employees who need to view and update data from anywhere
– Integrated analytics enable decisions to be made in real time
– Comprehensive sales and service functions
– Increase productivity of employees on the road

Simplified and Automated Lifecycle Management

With Remote Support Platform 3.2 for SAP Business One
Key Benefits
– Reduce your TCO due to increased operational effectiveness and decreased time for support
– Reduce time for system maintenance, i.e. simplified upgrades, automated back-ups, and
repairs
– Get accelerated and predictable problem resolution
– Achieve peak system performance, stability and improved data consistency
– Minimize unplanned downtime and business disruption

Start Changing Your Business – Now

Why Become a Digital Business?
As your business changes, a solid underlying foundation is critical.
Digital Economy
– You want to make the right business decisions at the right time, with real-time
access to information
You are growing
– You are a fast growing company, and your needs are out-pacing your current
system capabilities
– As your business grows, you need to put best-practice processes in place
– You need to automate your business processes, to increase productivity
Expansion
– If you are expanding into new markets, you need business software that will
enable you

A good ERP Solution…

Allows you to focus on running your business

Competitive Advantage
 Become relevant in the global economy by implementing robust business processes
 Allow your business to adapt to market changes, and anticipate business trends

Connected Business Functions

 Procurement and production systems are connected to finance. Business data is connected to
sales and service
  Your entire business runs more smoothly by touching all areas of collaboration within your
organization

Easy Access to Data

 Integrated analytics and reports should always keep informed on the health of your business

 Better decisions can be made on the back of real-time data insight

Easy to Set Up, Use and Optimize

Get started quickly and see results

Complete and Integrated

 All essential business functions – from accounting and sales to purchasing and inventory

 Available “out of the box”

 Gain complete visibility and control

Fast Time to Value

 Intuitive and easy for your employees to adopt and use
 Implement in a short time period
 Embedded implementation tools based on the proven Accelerated Implementation Program
Simple and Affordable
 Quick to set up and optimize
 Easy to use
 Get the latest technology priced for small and growing businesses

SAP Business One

SAP’s bestselling ERP solution by number of customers
– Used by 70,000+ customers
– Available as 50 country localizations and in 28 languages
– ~300 Software Solution Partners with 500+ solutions
– Implemented by more than 850 Value Added Resellers worldwide
– SAP Business One is used in >170 countries
 ITEM MASTER DATA

 SAP Business One enables you to manage all the items that you purchase,
manufacture, sell, or keep in stock.
 The way we define what these items are and how they are handled is through the itemmaster
data record.
 An item master data record is created for each product and identified with a unique code. You
would create an item master for a product at the level of a universal productcode or a catalog
number.
 Item master data is at the heart of almost every process in SAP Business One. It controls
how the item acts in the sales, purchasing, production, MRP, inventory, andservice modules.
 An item master data record stores essential information such as if the item is purchasedor sold,
the price of the item, the inventory level, and how purchasing of the item is forecast and
planned.
 This data is used automatically by the system in the processes for purchasing, sales,
production, managing your warehouse, and accounting.
 One important rule applies to item master data. If a master data record is used in a
marketing document or in an accounting or inventory transaction (such as an A/P invoice,
A/R Invoice, Journal Entry and so on), it cannot be deleted.
 But what about obsolete items? Perhaps you no longer wish to sell a particular model ofmonitor,
but since it has been stocked and sold in the past you cannot delete it.
 What can you do?
 Instead you can mark the item as inactive so it can no longer be added to sales orders. The
inactive checkbox can also be used for products that are not yet ready for sales andpurchasing
transactions.
 You can choose to exclude these inactive items from system reports. Later on, when you
archive old data and these items no longer have transactions related to them in thedatabase, it is
possible to delete them completely.
  Like other
types of master
data, such as the
business partner,
there are two
mainsections in
an item master
record: the header
and the tabs.
 The header
contains general
information about the
item. A unique ID
number must be
assigned as the code.
 The tabs contain more detailed contain information for processing the item.

 The header is also

where you can assign item
categories. The item
categories control whether
that item can be
purchased, sold, or stored
in inventory. An item can
belong tomultiple
categories.
 Designating the item as
an inventory item means
that the item can be used in
inventorytransactions.
 Similarly marking an
item for purchasing or
sales means that the item can be bought orsold on marketing documents.

 If you mark an item as inventory only, you cannot buy or sell that item.
 Perhaps you have an item that you never purchase, instead you manufacture the itemin-house
and then sell it. This item would be marked for inventory and sales.
 A second example would be a service that you sell. In this case, the item would bemarked
only for sales, and not for purchasing or inventory.
 A third example could be expenditures, like office supplies, that you purchase for use inyour
business. You might choose not receive these into inventory because they are used directly after
purchase. This item then would be a purchased item but not an inventory item.

 The purchasing data

and sales data tabs
contain the information
necessary for usingthat
item on marketing
documents.
 The sales data tab
contains information on the
item’s sales units of
measure, sales item
dimensions, packaging for
sales, and tax details.
 Similarly, the
purchasing data tab
contains information on the item’s purchasing unit ofmeasure with its dimensions, packaging
and tax details.


 Additionally, the purchasing data tab has information about specific vendors and
manufacturer catalog numbers.
 When you create a marketing document, the relevant information for the item defaultsinto the
document.
 Both tabs offer you a link to reporting via icons for Sales Analysis and Purchase Analysisfor the
item.
  The inventory
data tab shows us up-to-
date information on stock
levels and demand forthe
item for each warehouse.
This information is
updated dynamically so
shows a true picture at
any time.
 A matrix displays:
 The quantity currently
in stock
 The committed
quantity, which is the quantity
ordered by customers
 The ordered
quantity, which represents either quantity ordered for purchase by your company butnot yet delivered or
the quantity on production orders for an item produced in-house
 And in the last column, it displays each the quantity available for sales orders. The available quantity is
calculated by adding together the in stock and ordered quantities then subtracting anycommitted quantity.

 You can set a warehouse to be the default warehouse for transactions. If you do not seta default,
the first one appearing in the matrix will be the default.
 Other fields on this tab page, such as the valuation method and inventory unit ofmeasure
are discussed more in later topics.

 The planning tab contains information for

planning your inventory requirements.
 On this tab, you can control
whether the item is considered in
material requirementplanning.
 And if it is relevant for planning you
can indicate whether this is an item that is
purchased or built in-house and set a lead
time for calculating how long it will take to
restock the item. The other fields on this tab
support the materials requirement planning
  Item properties give you a way to
add more information about how
this item fits into yourcompany lines
of business, sales territories and
marketing goals.
 On this tab you can classify
the item with up to 64 different
properties which you canuse for
reporting, marketing purposes
and even for determining
pricing.
 For example, a particular
laptop might be classified
according to the type of user
(professional, student),
condition (new, refurbished), and other properties such asscreen size, processor brand,
price range, system memory, touchscreen or not, operating platform, and much more.

 Item master data controls how an item acts in the business processes. The data is used
automatically by the system in the processes for purchasing, sales, production, warehouse
management, service, and accounting.
 A master data record in used in transactions and cannot be deleted until those
transactions are archived, but the item can be marked inactive.
 Item categories control whether an item can be purchased, sold, or stored in inventory. An item
can belong to multiple categories. Designating the item as an inventory item means that the item
can be used in inventory transactions. Similarly marking an item forpurchasing or sales means
that the item can be bought or sold on marketing documents. If you mark an item as inventory
only, you cannot buy or sell that item.
 The inventory data tab tracks the in-stock, committed, ordered, and available quantitiesfor an
inventory item in each warehouse.
 The available quantity is equal to the total of the in-stock and ordered quantities minusany
committed quantity.