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Assignment 2 AIS

The document describes three cycles in accounting information systems: 1) The expenditure cycle involves determining goods and services needed for production, calculating requirements, and purchasing from suppliers either electronically or through printed orders. Payments to suppliers are scheduled and processed automatically. 2) The conversion cycle transfers expenditures to production, where the assembly system schedules and controls the manufacturing process using cost accounting methods. 3) The revenue cycle involves selling finished goods through order processing, shipping, billing, and receiving cash or processing credit sales.

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48 views

Assignment 2 AIS

The document describes three cycles in accounting information systems: 1) The expenditure cycle involves determining goods and services needed for production, calculating requirements, and purchasing from suppliers either electronically or through printed orders. Payments to suppliers are scheduled and processed automatically. 2) The conversion cycle transfers expenditures to production, where the assembly system schedules and controls the manufacturing process using cost accounting methods. 3) The revenue cycle involves selling finished goods through order processing, shipping, billing, and receiving cash or processing credit sales.

Uploaded by

mikheal beyber
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Expenditure Cycle

Determining which goods and services have to be ordered. Goods to be ordered are needed by the
assembly process. A system calculates the components that require to get on hand for scheduled
production and subtracts out on-hand and unallocated raw materials to hit the amounts that have got to
be acquired. Alternatively, if goods or services are needed for a selling or administrative function, the
user fills out a form that details her requirements and forwards it to the business department.

When goods are being purchased for ongoing production, the system will present the purchasing staff
with a preliminary commercial instrument, using the well-liked supplier stated within the inventory
computer file for every item to be purchased. The purchasing staff reviews and approves these orders,
which are then either sent electronically direct to suppliers or printed and mailed to them.

The system schedules payments to suppliers supported the predetermined payment terms with all.
When a scheduled payment date arrives, the system processes a batch of payments, which can either be
within the style of electronic funds transfers or checks.

Conversion Cycle

Expenditures like Labor, materials, and also the physical plant are going to be transferred to The
Conversion Cycle during which consists of two major subsystems: the assembly system: activities? the
assembly system involves the look, scheduling, and control of the physical product through the
manufacturing process, determining the needed raw goods requirements, authorizing the work to be
performed, and also the release of raw materials into production.

The cost method of accounting is major during this cycle and it monitors the flow of cost information
associated with production. It generated cost Information which is helpful for inventory valuation,
budgeting, cost control, performance reporting, and management decisions.

The Revenue Cycle

Firms sell their finished goods to customers through the revenue cycle. All transactions that include cash
sales and credit sales are recorded and processed. Revenue cycle transactions even have a physical and
a financial component, which are processed separately.

The sales order processing subsystem is chargeable for preparing sales orders, granting credit, shipping
products (or the rendering of service) to the customer, and billing customers. Cash receipts. For credit
sales, some period of your time (days or weeks) passes between the purpose of sale and also the receipt
of money.

REFERENCES:
https://www.slideshare.net/Salman437/revenue-cycle-ais
http://theiteducation.com/transaction-processing-system-in-ais-chapter-2/

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