1.  Sales Order Entry

2.  Shipping

3.  Billing

4.  Cash Collections

1.  Check the Customers Order - Sales Dept - Complete a sales order document

2.  Check the Customers Credit

3.  Check Inventory availability (and generate picking ticket)

4.  Respond to Customer Inquiries (customer service dept)

Sales Order Entry -

What to check on a customer's order?

(item + 4 cats)

complete a sales order including:

1.  Items in order

2.  Quantity ordered

3.  Sales Person

4.  Prices

Sales Order Entry -

How can IT make customer orders more efficient?

(2 + why?)

1.  Use websites - have customer enter own data,

mitigates user error and potential for increased sales through personal marketing (Amazon)

2.  Use a Choice Board - an interactive sales order entry system allowing each customer to customize the product to meet their needs (Dell)

Sales Order Entry -

Checks to perform on the sales order doc (3)

Checks

1.  Validity on acct #

2.  Completeness of form

3.  Reasonableness test (order quant, etc.)

Sales Order Entry -

Check Customer Credit

Sales Order Entry -

2 ways of approving credit (+ 3)

General authorization - for existing customers in good standing as long as its below their credit limit

Specific Authorization - requires manager approval, for:

1.  New Customers

2.  Customers w/past due balances

3.  Orders that exceed the credit limit

Sales Order Entry -

What is a Picking Ticket (3)

1.  lists each item, item #, + order quantity

2.  serves as authorization for the warehouse to pull these items and send to shipping

3.  Segregates custody (warehouse) and authorization (sales order dept) functions

1.  Picking the Order - done by the warehouse

2.  Packing + Shipping - done by Shipping

1.  Verify the actual quantity of goods received from the warehouse matches the quantity on the picking ticket + sales order document

2.  Once the quantities have been verified, the shipping clerk updates the shipping system for the order

1.  Updates the quantity available in inventory

2.  produces a packing slip listing each item in the shipment

3.  Produces 4 copies of the Bill of Laden

A legal document detailing the responsibilities for goods in transit

1.  sent w/goods to customer

2.  sent to freight carrier

3.  Stays in the shipping dept so the order can be tracked

4.  Sent to Billing so an invoice can be generated

1.  Invoicing the Customer - generate a sales invoice stating how much is owed and sending it to the customer

2.  Updating Accounts Receivable

Billing -

Accounts Receivable (2 methods + defs)

1.  Open Invoice Method - have customers pay per invoice - send 2 copies to customer, have them return 1 w/payment (called a remittance advise)

2.  Balance Forward Method - have your customers pay per a monthly statement which lists all activity since previous statements

Billing -

Exception Adjustments (def + reason)

returns + write-offs should be authorized by a manager who issues a CREDIT MEMO that authorizes accounts receivable to reduce customer account balance

(this segregates authorization + recording)

1.  mail room should open all mail from customers + complete a list of all checks received

2.  send a copy of the list + actual checks to the cashier who will deposit the checks

3.  Send a copy of the list + a copy of checks along w/remittance advises to Accounts Receivable for updating the customer account

Alternative: have customers send payments directly to the bank (LOCK-BOX payment)

1.  Operational type decision

2.  Strategic type decision

Revenue Cycle -

Operational decisions (2)

1.  extending credit to customers

2.  responding to customer inquiries

Revenue Cycle -

Strategic Decisions (4)

1.  determining the sales price of the product/service

2.  Setting policies for returns

3.  Determining short-term borrowing needs

4.  Setting + evaluating marketing policies

Revenue Cycle -

Common Report (3 + defs)

1.  Sales Analysis Report - shows the profitability of the company based on categories (salesperson, region, prod type, etc.)

2.  Cash Budget - detailed plan for expected cash inflows + outflows; allows management to assess the need for short-term borrowing

3.  Aging Schedule - a schedule that shows all accounts receivable by age (how long they've been outstanding), and allows the company to predict expected cash inflows + estimate bad debt

1.  Order Inventory (materials, supplies, etc)

2.  Receive the goods from vendor

3.  cash payment for the goods

Ordering of goods -

Main decision

Ordering of goods -

3 Common Inventory Control Methods

1.  Economic Order Quantity (EOQ)

2.  Materials Requirements Planning (MRP)

3.  Just In Time (JIT)

(second 2 attempt to minimize goods on hand)

def?: the traditional inventory method

goal: order enough inventory so that production is never interrupted.

downside:  EOQ tends to result in the company maintaining excess inventory

1.  Ordering costs - costs associated with processing orders

2.  Carrying Costs - costs associated with holding or storing the goods

3.  Stock-out Costs - costs associated with lapses in production (ie lost time/sales)

Materials Requirements Planning

(goal, def, good when...)

goal: focuses on improving the methods used to forecast sales

def: schedules production based on estimated sales

good when: sales relatively constant

upside: virtually eliminates the need to have any finished goods inventory

Schedules production based on actual sales (not made until ordered)

best when: sales amount not predictable

1.  a dept completes a PURCHASE REQUISITION FORM to request goods to be purchased.

2.  sends the form to the PURCHASING dept who negotiate terms with the vendor

3.  once terms set, Purchasing Dept generates a Purchase Order

Ordering of goods -

Purchase Order (def + sent to [5])

def: a contract that formally requests a vendor to sell + deliver a specific quantity of goods at specified prices

sent to:

1.  Vendor

2.  Accounts Payable

3.  Purchasing Dept (keep 1)

4.  Receiving Department (this copy does NOT have the quantity ordered)

5.  Requisitioning Department (ppl who requested goods)

goods should be sent to the receiving dept...

responsibilities:

1.  Do we accept the goods? - compare the packing slip received with the goods to a file of open purchase orders

2.  Verify quantity + quality of goods - receiving should count the goods and prepare a RECEIVING REPORT indicating the quantity ofitems received.

next steps:

1.  send the goods to the warehouse

2.  send the receiving report to Accounts Payable

1.  Authorize the Invoice for payment - Accounts payable checks the PO, Receiving Report, and Vendor Invoice.  These 3 docs = Voucher Packet

2.  Actually Paying the Invoice - Done by the cashier based on the voucher packet from accounts payable

1.  Product Design

2.  Planning + Scheduling

3.  Product Operations

4.  Cost Accounting

Develop a product that...

1.  meets the customers requirements in terms of quality + durability

2.  Minimize production costs

1.  Bill of Materials - indicates the part #'s, descriptions, and quantities of all components needed in making the product

2.  Operations List - Lists the sequence of steps needed to produce a good, incliding the equipment needed + time required for each step

Develop a production plan that will...

1.  allow us to meet existing orders

2.  project sales in the short run

3.  minimize raw material + finished goods inventories

1.  Manufacturing Resource Planning (MRP-II) - extension of MRP in that a production plan is based on expected future sales

2.  Lean Manufacturing - Extension of JIT in that is virtually eliminates all inventories b/c goods are produced based on actual sales

note: should still have some plan so suppliers can plan too

1.  Master Production Schedule (MPS) - details how many units to make in the planning phase

2.  Production Order - Authorizes production of of a specified quantity of the product

3.  Materials Requisition Form - The authorization to transfer raw materials from the warehouse to the factory

4.  Move Ticket - documents the transfer of parts + materials on teh factory floor

1.  Provide accurate product cost information for use in pricing + product mix decisions

2.  Capture + Process that data or information to calculate the COGS + ending inventory amounts on the financial statements

3.  To provide information used for Planning, Controlling, + Evaluating the performance of product operations

1.  Job Order Costing - prod costs determined for each job - used by companies who produce unique, discreet, or separately identifiable products

2.  Process Costing - product costs are accumulated per department - used by companies who produce a steady stream of nearly identical products

2 Main criticisms of traditional cost accounting

(and the solutions)

1.  Inaccurately assigns overhead to products b/c things less volume driven

Solution:  Use Activity Based Costing (ABC) - assigns costs based on the consumption of different activities  (prob=expensive)

2.  Reports Generated do not reflect factory automation; production managers are evaluated on things they can't control.

Solution: Use Throughput report instead

def: a measure of production effectiveness to achieve its goals - also a means to evaluate production managers

Productive Capacity=Total units/processing time

Product Processing Time = processing time/total time

Yield = # non-defective/total units (opp of defective rate)

Throughput = all mult together =

# non-defective units/total time

1.  various depts w/in the co - hours worked

2.  HR Dept - hiring, pay-rates + terminations

3.  Employees - voluntary deductions (401k)

4.  Govt Agencies - tax rates

5.  Insurance Co's + other outside co's - cost of insurance + whatnot

CHECKS!

1.  Employee paychecks (or direct deposit slips)

2.  Payroll Check - used to transfer $ into payroll acct from general checking acct

3.  Checks to pay employer paid benefits + tax withholding

1.  Update the Payroll Master File

2.  Update the tax rates + deduction amts

3.  Validate time + attendance

* 4.  Prepare Payroll

* 5.  Dispurse Payroll

6.  calculate the employee paid benefits + taxes

7.  Disburse those amounts to the govt, insurance, etc.

1.  Time Sheets

2.  Electronic Time Clock

3.  Job Time Sheet

professional: still track hours/project or client

1.  Paychecks sent to the cashier

2.  Payroll Register sent to accounts payable - authorizes $ into payroll acct - lists:

gross pay, deductions, + net pay per employee

Payroll Cycle: Dispurse Payroll

(2 places, 5 acts for second)

1.  Accounts Payable - gets the payroll register, checks it, creates a disbursements voucher to authorize payroll check

disbursements voucher + payroll register sent to cashier

2.  The Cashier:

a.  prepares + signs payroll checks

b.  Distributes the paychecks to each employee

c.  Hands over unclaimed to internal audit

d.  send the payroll register to payroll dept

e.  sends the disbursement voucher to accounting to update the GL

FICA - 6.2% up to 106800 = SS

1.45% = medicare

FUTA/SUTA - if paying <$7000

Performs payroll function for companies.

Maintains the payroll master file + produces paychecks + the payroll register (example=paychex)

4 Activities of the

General Ledger + Reporting System (GLRS)

1.  Update the GL (posting)

2.  Post adjusting entries to the GL

3.  Prepare financial statements

4.  Produce managerial reports

GLRS: Posting Entries to GL

(from 2 places)

1.  summary journal entries of routine transactions

2.  Individual entries of non-routine transactions (from treasurer)

Come from the Controller,

after the initial trial balance

1.  Accruals - rev/exp recorded b4 cash exchange

2.  Deferrals - cash exchanged before rev/exp recorded

3.  Estimates: Bad Debts + depreciation

4.  Re-Evaluations - reconcile the difference btwn actual costs and recorded value - Lower of Cost of market adjustment for inventory (LCM)

5.  Error Correction

1.  Income Statements

2.  Record + Post closing entries

(closeout rev, exp, + div [nominal accts)

3.  Statement of Owners' Equity

4.  Balance Sheet

5.  Statement of cash Flows

1.  Operating Budget - shows expected revenue + exp for each dept

2.  Capital Expenditures Budget - shows expected cash in/out flows for each project

3.  Cash Budget - shows expected cash in/ out flows for the org to assess ST borrowing

Compare budgeted to actual, difference = variance

variance must be w/in a certain range or bad news

1.  Static Budget - easiest to use, meant for a set amt of product

2.  Flexible Budget - shows both variable + fixed costs

Data Warehouse: very large databases containing both detailed + summarized data for many previous years

Data Marts: a smaller data warehouse built for a specific function (finance, HR, etc)

1.  Online Analytical Processing (OLAP) - makes use of queries to look for hypothetical relationships

2.  Data Mining - makes use of statistical techniques to look for relationships that we never thought existed

Data validation Controls - crucial to make sure the data is accurate

Scrubbing - Verifying the accuracy of the data

Controls to Protect:

a) encryption

b) access controls (ie passwords)

c) backup provisions