ACCOUNTING AND FINANCE

LEVEL - III
Module Title: - Processing Payment documentation
MODULE CODE : LSA ACF3 M08 1123
Acronyms
POS_____________________________________ point of sale
CNP_____________________________________ Card not present
PA ______________________________________ Payment authorization
TX _____________________________________ Transformation Extender
ATM _____________________________________ Automatic Teller machine
UNIT ONE: ENTERING DATA TO SYSTEM
1.1. Basics of data and systems
Data is information that has been translated into a form that is efficient for movement or
processing. Relative to today's computers and transmission media, data is information
converted into binary digital form. It is acceptable for data to be used as a singular subject or
a plural subject.
An organized, machine-readable collection of symbols, to be interpreted as a true account of
some enterprise
Data is defined as a collection of individual facts or statistics. (While “datum” is technically
the singular form of “data,” it's not commonly used in everyday language.) Data can come in
the form of text, observations, figures, images, numbers, graphs, or symbols.
Information is a stimulus that has meaning in some context for its receiver. When information
is entered into and stored in a computer, it is generally referred to as data.
 Data is a related group of files
 file is a related group of records
 record is a related group of fields
 field is a specific attribute of interest for the entity (record)
1.1.1 Characteristics of Data Quality
Correctness: Data should be sufficiently accurate for the intended use and should be
captured only once, although it may have multiple uses. Data should be captured at the
point of activity.
Data is always captured at the point of activity. Performance data is directly input into
Performance Plus (P+) by the service manager or nominated data entry staff. Access to P+ for
the purpose of data entry is restricted through secure password controls and limited access to
appropriate data entry pages. Individual passwords can be changed by the user and which
under no circumstances should be used by anyone other than that use Where appropriate,
base data, i.e. denominators and numerators, will be input into the system which will then
calculate the result. These have been determined in accordance with published guidance or
agreed locally. This will eliminate calculation errors at this stage of the process, as well as
provide contextual information for the reader. Data used for multiple purposes, such as
population and number of households, is input once by the system administrator.
Validity: Data should be recorded and used in compliance with relevant requirements,
including the correct application of any rules or definitions. This will ensure consistency
between periods and with similar organizations, measuring what is intended to be measured.
Relevant guidance and definitions are provided for all statutory performance indicators.
Service Heads are informed of any revisions and amendments within 24 hours of receipt from
the relevant government department. Local performance indicators comply with locally
agreed guidance and definitions.
Reliability: Data should reflect stable and consistent data collection processes across
collection points and over time. Progress toward performance targets should reflect real
changes rather than variations in data collection approaches or methods. Source of data is
clearly identified and readily available from manual, automated or other systems and records.
Timeliness: Data should be captured as quickly as possible after the event or activity and
must be available for the intended use within a reasonable time period. Data must be
available quickly and frequently enough to support information needs and to influence
service or management decisions.
Performance data is requested to be available within one calendar month from the end of the
previous quarter and is subsequently reported to the respective Policy and Scrutiny Panel on a
quarterly basis. As a part of the on-going development of Performance Plus it is intended that
performance information will be exported through custom reporting. This will improve
access to information and eliminate delays in publishing information through traditional
methods.
Relevance: Data captured should be relevant to the purposes for which it is to be used. This
will require a periodic review of requirements to reflect changing needs.
Completeness: Data requirements should be clearly specified based on the information needs
of the organization and data collection processes matched to these requirements. Checks will
be made to ensure for completeness of data. An annual assessment of this is undertaken by
Internal Audit.
 1.1.2. Benefit of data
 Improve operational efficiency
 Customer Acquisition and Retention
 Focused and Targeted Promotions
 Potential Risks Identification
 Improve Supplier Networks
 make informed decisions that can lead
 enhanced business performance
 strong customer relationships
Manual and Computerized Accounting System: Proper supporting documentation
(itemized invoice) must be attached to the payment request to support the legality of a
payment or to accurately describe the goods or services being purchased.
Many small businesses do their accounting manually and they are happy with this setup.
Others may be considering using a computerized system, since accounting software is so
affordable these days.
Accounting systems: 1.Manual Accounting System 2.Computerized Accounting System.
Computerized Accounting System: System allows the user to enter the transaction into the
program once, and all accounts are updated as necessary. For example, if your business buys
Br 800 worth of office supplies with a combination of Br 300 cash and Br 500 credit, instead
of going to each accounting and posting the transaction, with a computerized system you
would check office supplies, cash and the selected account payable account and the
transactions automatically would post to the accounts.
Computerized Accounting System is sometimes called Accounting Information System is a
collection of resources such as people and equipment designed to transform financial data
into information. The information is communicated to a wide variety of decision makers.
Computerized accounting systems usually consist of five components:
a) The people who operate the system and perform various functions.
b) The procedures both manual and automated involved in collecting, processing, and storing
data about organization’s activities.
c) The data about the organization’s transactions
d) The software used to process the organization’s data
e) The information technology infrastructure including computers, peripheral devices, and
network communication devices. The five components together enable the computerized
accounting systems system to fulfill three important functions in any organization.
a) It collects and stores data about activities and transactions.
b) It processes data into information that is useful for making decisions.
c) It provides adequate controls to safeguard the organization’s assets including its data, to
ensure that the data are available when needed and are accurate and reliable.
 Manual Accounting System: Accountant or bookkeeper to post business transactions to the
general journal, general ledger and worksheet by hand. This process can be completed by
either using actual paper journal and ledger sheets or by creating these sheets in a computer
program such as Excel. It is considered manual because each transaction is entered into the
system individually. An expense or expenditure is an outflow of money to another person or group
to pay for an item or service, or for a category of costs. For a tenant, rent is an expense. For students
or parents, tuition is an expense. Buying food, clothing, furniture or an automobile is often referred
to as an expense. An expense is a cost that is "paid" or "remitted", usually in exchange for something
of value. Something that seems to cost a great deal is "expensive". Something that seems to cost
little is "inexpensive". "Expenses of the table" are expenses of dining, refreshments, a feast, etc.
 Basics types of Expense Accounts
 Cost of Goods Sold
 Operating Expenses
 Non-Operating Expenses (or Other Expenses)
 Employee and Officer Expense Accounts
 Cash flow: In a cash flow statement, expenditures are divided into operating, investing, and
financing expenditures.
 Operational expense – salary for employees
 Capital expenditure – buying equipment
 Financing expense – interest expense for loans and bonds
1.2. Allocating and updating data
Allocation is the process of requesting access to a data established. If you allocate a data set
that exists, the system allows you to open the data set. If you allocate a data set that does not
exist, the system creates space for it on an available device and allows you to open that space
Data Allocation is an intelligent distribution of your data pieces, (called data fragments) to
improve database performance and Data Availability for end-users. It aims to reduce overall
costs of transaction processing while also providing accurate data rapidly in your DDBMS.
1.2.1. Types Data Allocation: A. Data Fragmentation and B. Data Duplication
 Data Fragmentation: Fragmentation is a process of disintegrating relations or tables into
several partitions in multiple locations. It divides a database into various sub tables and sub
relations so that data can be distributed and stored efficiently. Database Fragmentation can be
of two types: horizontal or vertical.
 Methods of Data Fragmentation: In this section of our fragmentation and replication in
distributed database guide, we discuss the two fundamental fragmentation strategies:
horizontal and vertical. In addition to these, Distributed Database Management Systems also
allow the nesting of fragments in a hybrid fashion, called Hybrid Fragmentation.
 Horizontal Fragmentation
 Vertical Fragmentation
Horizontal fragmentation: Horizontal fragmentation refers to the process of dividing a table
horizontally by assigning each row or (a group of rows) of relation to one or more fragments.
These fragments are then be assigned to different sides in the distributed system.
Vertical Fragmentation: Vertical fragmentation refers to the process of decomposing a table
vertically by attributes of columns. In this fragmentation, some of the attributes are stored in
one system and the rest are stored in other systems. This is because each site may not need all
columns of a table.
1.2.2. Data Duplication: Distributed Database Duplication is the process of creating and
maintaining multiple copies (redundancy) of data in different sites. The main benefit it brings
to the table is that duplication of data ensures faster retrieval. This eliminates single points of
failure and data loss issues if one site fails to deliver user requests, and hence provides you
and your teams with a fault-tolerant system.
However, Distributed Database Replication also has some disadvantages. To ensure accurate
and correct responses to user queries, data must be constantly updated and synchronized at all
times. Failure to do so will create inconsistencies in data, which can hamper business goals
and decisions for other teams
Problems created by duplicate data.
 Lost Income and Wasted Costs
 Lack of a Single Customer View
 Lack of Personalization
 Ineffective Customer Service
 Inaccurate Reporting
 Lost Productivity
 Storage Costs
 Confusion among Customers
 Missed Sales Opportunities
1.2.3. Data updating: Data updating means the functional process of updating information
already contained in a data base within the System that results in the creation of a new record
and may result in storage of existing data as history. The modification of data that is already
 in the database is referred to as updating. You can update individual rows, all the rows in a
table, or a subset of all rows. Each column can be updated separately; the other columns are
not affected.
1.3. System Controls
Any organized assembly of resources and procedures united and regulated by interaction or
interdependence to accomplish a set of specific functions. System can be defined as a
collection of interrelated components that work together towards a collective goal. A system
is a group of interacting or interrelated elements that act according to a set of rules to form a
unified whole. A system, surrounded and influenced by its environment, is described by its
boundaries, structure and purpose and expressed in its functioning. Systems are the subjects
of study of systems theory and other systems sciences.
Benefits of Systems Integration
 Accessibility, Accuracy, and Coordination
 Efficiency and Productivity
 Cost Effectiveness
 Availability of New Performance Insights
 Security
Systems Development: Systems development is the process of defining, designing, testing,
and implementing a new software application or program.
The process of creating and maintain systems is called systems development or systems
analysis and design.

Figure 1 component of information system

1.3.1. Benefit of Systems Development
a) Reduce the time it takes to run the business
b) Increase the consistently of customer expectations
c) Determination reliable results and quality all the time
d) Increase productivity and performance
e) Reduce costs
f) Create Organization structure within the business
g) Establish procedures for resolving issues
h) Increase Profitability: The double entry system of accounting takes its name from the fact that
every business transaction is recorded by two types of entries:
1. Debit entries to one or more accounts and
2. Credit entries to one or more accounts. In recording any transaction, the total dollar (birr)
amount of the debit entries must equal the total dollar (birr) amount of the credit entries.
Journal: Transactions are initially recorded in chronological order in a journal before being
transferred to the accounts. Thus, the journal is referred to as the book of original entry.
For each transaction the journal shows the debit and credit effects on specific accounts.
Journalizing: Entering transaction data in the journal is known as journalizing.
Special Journals: A journal in which only one kind of business transaction is recorded is a
special journal used to record only one type of entries.
Special journals differ from the general journal or the combination journal in that they are
meant only for specified types of transactions—only one type.
 Sales journal: Sales journal is a special journal used to record only sales of merchandized on
account.
 Purchase journal: used to record purchase on account
 Cash receipt journal: use to record cash receipt (cash collection)
 Cash payment journal: used to record payment of cash.
 Combination Journal: is a multi-column journal that combines all journals into one book of
original entry.
Revenue, Expense, Profit And Loss
Revenues are the gross increases in capital as the result of the sale of merchandise, the
performance of services for a customer, the rental of property, the lending of money etc.
Revenues are also known as Income.
Expense: Is the decrease in capital that results from the operation of a business. Business
expenses are the costs of items and services used to produce revenue.
Profit: when the total revenue exceeds the total cost of operating a business or expenses, the
difference is called a profit.
Loss: When the total expense (costs) exceeds the total revenue the difference is called net
loss.
Principles of Debit and Credit for Revenue and Expense Accounts
The principles of debit and credit for revenue and expenses account are shown as follows:
Account Increase Side Decrease side Account balance
Revenue Credit Debit Credit
 Expense Debit Credit Debit
Companies may use various kinds of journals, but every company has the most basic form of
journal, a general journal. Typically, a general journal has; spaces for dates, account titles and
explanations, references, and two money (amount) columns.
It generates useful financial information in the form of financial statements including income
statement, balance sheet, cash flow statement and statement of changes in equity. It is called a
cycle because the steps are repeated each reporting period.
Analyzing analyze transactions in preparing for journalizing
Jornalize record debit and credit in a journal
Posting transfer debit and credit from the journal to ledger
Preparing unadjusted trial balance: summarize ledger accounts and amounts

Adjusting ETBing account balance up to date

Preparing adjusted trial balance summarize adjusted ledger accounts and amounts
Prepare statements prepare income statement, balance sheet etc from adjusted
trial balance.
Close close temporary accounts and update owner’s capital
account
Prepare post closing trial balance test clerical accuracy of debit and credit of adjusting and
closing steps
Reverse (optional)

 Checking for accuracy: Since, accuracy is extremely important in all accounting work, there
are certain built in mechanisms to check the accuracy of the bookkeeping work. The
beginning balance sheet is said to be accurate if it is ‘in balance’. Similarly, every journal
entry is said to be accurate if it is ‘in balance’. That is if the sum of the debit entry equals the
sum of the credit entry.
 Making correction: If the debit part of an entry does not equal the credit part it indicates as
an error is made. The error must be discovered and corrected right away.
Part I: Fill in the blank space
1.----is the process of creating and maintaining multiple copies (redundancy) of data in different sites.
2. ---- is defined as a collection of individual facts or statistics.
3. ------ is a related group of records
4, --------- method of data fragmentation dividing a table horizontally by assigning each row or (a group
of rows) of relation to one or more fragments
Part II Multiple-Choice
1. Which of the following characteristics defines correctness of data?
A) Accurate data captured multiple times
 B) Data captured at the point of activity
C) Data captured only at the end of the process
D) Data captured without considering its relevance
2. What distinguishes a computerized accounting system from a manual one?
A) Manual systems allow for automatic data entry
B) Computerized systems require paper-based documentation
C) Computerized systems update all accounts automatically
D) Manual systems cannot process expenses accurately
3. Which type of data fragmentation involves breaking down tables into smaller schemas?
A) Horizontal Fragmentation B) Vertical Fragmentation
C) Data Duplication D) Hybrid Fragmentation
Part III: Write short answer for the following question
1. Define Data
2. Write the types of data allocation
3. Identify methods of data fragmentation
4. Identify possible problem that can be made Data duplication
5. Write five components of an information system

UNIT TWO: PAYMENT FACILITY

2.1. Characteristics of payment facility
Payment is the voluntary transfer of money, equivalent, or other valuable items from one
person to another in exchange for goods or services received or to meet a legal obligation.
The person who gives the money is often called the payer, while the person who gets the
money is called the payee. Payment is the exchange of money, goods, or services for goods
and services in an acceptable amount to both parties and has been agreed upon in advance.
You can pay with cash, a check, a wire transfer, a credit card, a debit card, or even crypto
currency.
The way money works now, you can pay for things with cash. Money is a convenient way to
pay for things and easy to store. It has made economic transactions easier. Before, many
people used money and other ways to make payments; people would trade one good or
service for another. For example, if an egg farmer had a lot of extra eggs and wanted milk, he
would have to find a dairy farmer who would trade eggs for milk.
 If a good dairy farmer couldn't be found in time, the egg farmer wouldn't get the milk, and the
eggs would go bad, making them useless. On the other hand, the money stays worth what it is
worth over time. But bartering is still used by businesses that want to trade services.
Payment can be the exchange of something of value or use to both parties. Most of the time,
an invoice or bill comes before a payment. Payees can usually choose how they want to be
paid most of the time. However, several rules say that the payer must take up to a certain
amount of the country's legal cash. When a payment is made in a foreign currency, there are
often fees for the foreign exchange transaction. These fees are usually between 2 and 3
present of the total payment amount, but they can be much higher depending on the bank,
card issuer, and place of purchase.
Privacy: It refers to whether the payment model is anonymous or not. It is concerned with
whether a third party can trace back who was involved in payment transaction.
Security: This is concerned with whether the payment method is secured, in particular
whether it is easy to perpetrate different kinds of fraud such as forged payment.
Transferability: This refers to whether a payment can be carried out without the
involvement of a third party such as bank.
Divisibility: This refers to whether a payment can be divided into arbitrary small payments
whose sum is equal to original payment.
Acceptability: This refers to whether the payment method is supported globally, i.e. not by a
closed group only.
 Ways of payment

Figure 2.1. Way of payment

Credit: Most people use credit and debit cards to buy things and pay for them. But many
businesses that accept credit cards are charged a fee by both the merchant who provides the
machine and payments infrastructure and their bank. Most of the time, this fee is a fixed rate
or a percentage of the transaction amount.
 Cash: Cash is still used in a lot of businesses, including retail. For example, you can still pay
cash at coffee shops and convenience stores. Due to the fees with debit and credit cards,
many small stores would rather have customers pay in cash. Cash can be lost, stolen, or
destroyed, which is bad. Businesses that do a lot of large transactions often have to pay more
for security measures.
Mobile Phones: Contactless payment technology has made it easier to pay than ever in the
past few years. The customer's banking information can be accessed by the credit or debit
card machine, also called a point of sale terminal (POS). This is done through the software
application on the customer's mobile device. Once the phone has read the information from
the POS terminal, a signal is sent to let the customer know that payment has been received.
Checks: A bank cashier's check or a certified check is two types of checks that banks offer to
help sellers get the money that the buyer owes them. Over time, people have used checks less
and less because technology has made it possible to send payments electronically. There are,
however, times when checks can be useful, such as when the vendor needs a guarantee of
payment.
2.2. Maintaining documentation
Documentation is any communicable material that is used to describe, explain or instruct
regarding some attributes of an object, system or procedure, such as its parts, assembly,
installation, maintenance and use. Documentation encourages knowledge sharing, which
empowers your team to understand how processes work and what finished projects typically
look like. Documentation is any communicable material that is used to describe, explain or
instruct regarding some attributes of an object, system or procedure, such as its parts,
assembly, installation, maintenance and use. As a form of knowledge
management and knowledge organization, documentation can be provided on paper, online,
or on digital or analogue media, such as audio tape or CDs. Examples are user guides, white
papers, online help, and quick-reference guides. Paper or hard-copy documentation has
become less common. Documentation is often distributed via websites, software products,
and other online applications.
Documentation as a set of instructional materials shouldn't be confused with documentation
science, the study of the recording and retrieval of information.
2.2.1. Types of documentation
a) Product Documentation
b) Process Documentation
c) Sales and Marketing Documentation
a) Product Documentation: Product documentation describes the information related to a
product and includes the method to use this product. The information includes the product
specifications, manuals, logic, disclaimers, and information on all the features of the product.
Types of Product Documentation: Although there are many types and sub-types, product
documentation can be divided into two major categories.
 System Documentation
 User Documentation
System Documentation: System documentation contains information such as architecture,
design, and source code that is used by product designers and manufacturers. The technical
part of system documentation is aimed at a highly technical audience such as researchers and
engineers. The business part of system documentation is aimed at business developers and
marketers. System documentation is not generally released to the public.
User Documentation: Use documentation is the content you provide end-users with to help
them be more successful with your product or service. Depending on the product, the
information is aimed at either a technical or a non-technical audience. Examples are user
manuals, quick start guides, and troubleshooting manuals.
b) Process documentation: A process guide is a step-by-step document that explains how to do
something in your business. For example, it might explain exactly how to transition an aspect
of your data from legacy servers to the cloud. It might take the form of a policy, a tutorial or a
flow chart. It could live in your business plan, your company handbook, your new-hire
training manual or your cloud-based standard operating procedures.
Process documentation is the act of capturing or documenting all of the steps in a particular
task. Ideally, it should happen in real time. As employees perform a task, they document each
step they take. On-going process documentation, followed by regular process review, helps
staff and managers learn what works and what doesn’t, helping everyone adapt the process
guides as the business evolves.
Examples of process documentation include:
 Step-by-step guides: Detailed, sequential instructions for completing a specific task or
operation
 Checklists: A list of items to verify, inspect, or complete, ensuring consistency and thorough
 Tutorials: Educational resources that guide users through a process, often including tips and
best practices
 Process maps, diagrams, or flowcharts: Visual representations of a process that display the
sequence of steps, decision points, and possible outcomes
 SOPs (Standard Operating Procedures): Formal, written instructions that outline how a
specific task should be performed within an organization
 Workflow documentation: Formal documentation that specifically focuses on operational
aspects of a process, such as task sequences, interactions between roles or teams, and
dependencies.
 Company policies: Official rules, guidelines, or principles that define how employees should
perform tasks, make decisions, or interact with stakeholders
 Figure 2.2. Checklist Template
C). Sales and Marketing Documentation: Sales documentation is writing down anything
that helps your sales team close deals. It can range from: Sales processes, such as your sales
methodology and methods of collaboration with other departments, too. Sales collateral, such
as slide decks and case studies
A marketing requirements document is one that tells you exactly how you are supposed to
market a particular product or service. This document is supposed to be created by the
product creators or service providers, but the truth is many of them don't know they need this.
Payment documentation means all documents which are either
(i) specified in the Purchase Order which must be sent to and approved by Schneider Electric
as the condition for payment of the Price or Purchase Order Price, or
(ii) if the relevant Purchase Order fails to specify any documents,
(a) A commercial invoice correctly stating the Price or Purchase Order Price and, if any, all
requested details as per applicable law,
(b) an original copy of the Final Acceptance Certificate bearing Schneider Electric’s
company stamp and its authorized representative’s signature; and
(c) if any third party Intellectual Property Right is involved in the manufacture, use, or
delivery of the Products, Works and/or Services, all necessary documents or certificates
which prove that Schneider Electric has the license or right to use, sell or otherwise dispose
of the Products and/or Services supplied by the Supplier.
Part I Say true for correct statement and false for incorrect statements (one point each)
1. Payment is the exchange of money, goods, or services for goods and services in an acceptable
amount to both parties and has been agreed upon in advance.
2. System documentation is the act of capturing or documenting all of the steps in a particular
task.
3. Security is only the characteristics of payment.
4. Sales documentation is writing down anything that helps your sales team close deals.
5. Mobile phone is a method of payment good and service.
Part II - Choice
1. What payment method might be preferred by small retail businesses due to its immediate
availability and avoidance of transaction fees associated with credit/debit cards?
a) Credit card b) Mobile phone payments c) Cash d) Checks
2. For launching a new product, which type of documentation is crucial to provide clear
instructions and information for both technical and non-technical users?
 a) Process Documentation b) Sales and Marketing Documentation
c) User Documentation d) System Documentation
3. Which form of documentation aids in capturing detailed step-by-step guides, checklists,
and process maps, essential for ongoing process review and optimization?
a) Sales Collateral b) User Manual c) Process Documentation
d) Marketing Requirements Document
4. What documentation is necessary within a business-to-business context to ensure
compliance and successful payments as per specified conditions in the Purchase Order?
a) Final Acceptance Certificate b) Intellectual Property Documentation
c) Payment Documentation d) Sales Methodology
5. Which payment method has been increasingly facilitated by contactless payment
technology, allowing customers to make transactions through their mobile devices at point-
of-sale terminals?
a) Checks b) Credit Card c) Cash d) Mobile Phone Payments
Part III- Write short answer for the following question
1. Discuss Characteristics of payment
2. Define ways of payment
3. Identify type of documentation
4. Identify Sales and Marketing Documentation