Scribd
Upload
246 views24 pages

CHAPTER 16 - Accounting Transaction Cycles

This document discusses accounting transaction cycles, which represent how economic events within a business are recorded as accounting transactions. It describes the four main transaction cycles - financial, expenditure, revenue, and conversion - and the economic events and application systems associated with each. The cycles emphasize the relationships between different accounting transactions and make understanding the accounting process easier.

Uploaded by

febrianis maghfiroh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
246 views24 pages

CHAPTER 16 - Accounting Transaction Cycles

This document discusses accounting transaction cycles, which represent how economic events within a business are recorded as accounting transactions. It describes the four main transaction cycles - financial, expenditure, revenue, and conversion - and the economic events and application systems associated with each. The cycles emphasize the relationships between different accounting transactions and make understanding the accounting process easier.

Uploaded by

febrianis maghfiroh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 24

CHAPTER 16:

ACCOUNTING TRANSACTION
CYCLES
J.L. Boockholdt, Ph.D., C.P.A.,
C.M.A.
By: Dyah Nirmala A.J., M.Si.
Learning Objectives:
• To recognize those economic activities in
which all organizations engage.
• To understand how economic event are
recorded as accounting transactions.
• To find out the transaction cycles that make
up an accounting transaction processing
system.
• To learning the application systems
constituting each transaction cycle.
INTRODUCTION
Different accountants describe transaction
cycles in different ways. The cycles described
in this chapter represent just one way of
looking at them. As you work with
information systems, you may encounter
accountants who use five or even six
transaction cycles. They are not incorrect;
they are simply using different ways of
viewing the economic events that make up an
organization’s activities.
Benefits from studying transaction cycles

• Accounting is continuous
• Cycles emphasizes relationships
• Cycles make your task easier
Economic Events

Actions by a business affecting its assets,


liabilities, and owners’ equity: the accounting
system records it as a transaction.
The Cycle of Business Activities

Capital
Sale
Investment

Input
Conversion
Acquisition
Business Activity Events
Cycle
Capital Investment Raise capital
Use capital to acquire property
Periodic reporting
Input Acquisition Request inputs to the conversion Process
Receive inputs
Record obligation to pay
Pay for inputs
Conversion Consume labor, material, and overhead
Sales Deliver to customer
Request payment
Receive payment
ECONOMIC EVENTS &
ACCOUNTING TRANSACTIONS
Transaction Cycle(s)
A set of accounting transactions occurring in a
normal sequence and used to record economic
events:
1. Financial Cycle
2. Expenditure Cycle
3. Revenue Cycle
4. Conversion Cycle
Financial Cycle

Those accounting transactions recording the


acquisition of capital from owners and/or
creditors and reporting to them on how it is
used.
Expenditure Cycle

Those accounting transactions recording the


acquisition of material and overhead items for
the conversion process of the business.
Revenue Cycle

The accounting transactions recording the


generation of revenue from the outputs of the
conversion process.
Conversion Cycle

Those transactions incurred when inputs to the


conversion process are converted into salable
goods or services.
Economic Events and Application
Systems That Process Them
Transaction Cycle Economic Events Application System
Financial Raise capital Journal entry
Consume capital Property
Periodic reporting Financial reporting
Expenditure Request inputs Purchasing
Receive inputs Receiving
Obligation to pay Voucher
Payment Cash disbursements
Conversion Consume labor, material, Cost accounting, payroll,
overhead and inventory
Revenue Receive request Order entry
Deliver Shipping
Request payment Billing
Receive payment Cash receipts
Question A
• What are the components of the cycle of
business activities?
• Which economic events occur during sales?
• What is a transaction cycle?
• Which application systems are in revenue
cycle?
Question B
• Describe the conversion processes that take
place in manufacturing companies.
• Which economic events occur during
conversion?
• What are the four transaction cycles?
• Which application systems are in
conversion cycle?
Question C
• Describe the conversion processes that take
place in service companies.
• Which economic events occur during input
acquisition?
• How do events in the financial cycle make
it different from the other cycles?
• Which application systems are in
expenditure cycle?
Question D
• Describe the conversion processes that take
place in merchandising companies.
• Which economic events occur during
capital investment?
• How can the same transaction cycle differ
significantly between different businesses,
even if they are in the same industry?
• Which application systems are in financial
cycle?

You might also like