Business

Business Process
Process
Fundamentals
Fundamentals
 Business Process

• A collection of activities or flow of

work in an organization that creates
value
• Sales Process
– Begins with a customer order for goods
or services and ends with the collection
of cash from the customer

• Purchasing Process
– Begins with a request for goods or
services and ends with payment to the
vendor
• Business Process Outsourcing
– Procuring from other companies specific
business processes

• Business without Boundaries

– Combination of networked enterprises
and globalization
• Heart of an AIS

• Source Document
– A piece of paper or an
electronic form that records a
business activity such as
purchase or sales of goods
 Journals

• A chronological record of business

events by account
 Journals

General Journals Special Journals

Sales Journal
Purchases Journal
Cash Receipts Journal
Cash Disbursement Journal
 Ledgers
• A collection of detailed monetary
information about an organization’s
various assets, liabilities, owner’s
equity, revenues and expenses

• Chart of Accounts
– Provides the organizational
structure for the general ledger
 Trial Balances and
Financial Statements
• Trial Balance
– Listing of all accounts and their debit and
credit balances
• Adjusting Entries
– Unrecorded transactions of the business
• Financial Statements
– Primary output of a financial accounting
system
 Record transaction in a journal

Post journal entries to a ledger

Prepare an unadjusted trial balance

Record and post adjusting journal entries

Prepare an adjusted trial balance

Prepare financial statements

Record and post closing journal entries

Prepare a post-closing trial balance

 Coding Systems
• Numeric Codes
– Codes that use numbers only

• Alphanumeric Codes
– Codes that use numbers and
letters
 Purposes of Coding
• Uniquely identify accounts or
transactions
• Compress data
• Facilitate classification of accounts
or transactions
• Communicate special meaning
 Types of Codes
• Mnemonic Codes
– Help the user remember what they practices
– S, M, L, XL

• Sequence Codes
– A sequential set of numbers used to identify
customer accounts, employee payroll checks,
customer sales invoice and so forth
• Block Codes
– Sequential codes in which specific
blocks of numbers are reserved for
particular uses

• Group Codes
– Created when two or more subcodes are
combined
• Major Accounts
100-199 Current Assets
200-299 Noncurrent Assets
300-399 Current Liabilities
400-499 Long-term Liabilities
500-599 Owner’s Equity
600-699 Revenue
700-799 Cost of Goods Sold
800-899 Operating Expenses
900-999 Nonoperating Income and Expenses
• Current Assets Detail
100 Current Assets Control
110 Cash
120 Marketable Securities
121 Common Stock
122 Preferred Stock
123 Bonds
124 Money Market Certificates
125 Bank Certificates
130 Accounts Receivable
140 Prepaid Expenses
150 Inventory
160 Notes Receivable
Design Considerations in
Coding

• It must serve some useful

purpose
• It must be consistent
• Managers must plan for future
expansion