Hardware and Software Selection Paper
Ashlee Aviguetero, Bobbi Duck, Tracy Finch, and Julie Stoltz University of Phoenix
March 23, 2009
Accounting Cycle Description Paper
An organization’s accounting information system includes collecting information then dividing the information into cycles. This paper will identify the five accounting cycles and specifically how Riordan Manufacturing uses the expenditure cycle. The strengths and weaknesses of the internal controls related to the expenditure cycle will be examined. This paper will explain how to integrate the expenditure cycle into an enterprise-wide accounting information system. The various types of information systems necessary to achieve this integration will be illustrated. Lastly, this paper will demonstrate the flow of accounting information through Riordan Manufacturing.
The five accounting cycles are the revenue, expenditure, financing, fixed-asset, and conversion cycles. Each has its specific function within the accounting system. Almost every company uses the first four accounting cycles, not all will use the conversion cycle. As a company grows, it is important for management and employees to understand the reasons for each accounting cycle and ways the information needs to flow. The accounting cycles build upon each other. Without the revenue cycle, none of the other cycles would come into play. Once a company has revenue producing activities, the expenditure cycle is necessary to pay the bills incurred in producng the goods required for the revenue cycle. The financing cycle is necessary to give the company availability to purchase the necessary buildings and machinery for production along with making sure there are funds for the shareholders. The fixed-asset cycle records depreciation on the buildings and machinery along with the disposal of said items. The conversion cycle is important to manufacturing companies who use cost accounting to determine production costs. Table 1 (UOP, 2009), explains each phase of the accounting cycle and what documents and ledger accounts are affected by that cycle. Table 1
Phases of Accounting Cycles and Their Effects
|Accounting Cycle |Tasks |Documents |Ledger Accounts | |Revenue |Captures transactions such as |Packing slips, bills of lading,|Sales, inventory, freight, | | |sales orders, accounts |invoices, statements, receipts,|accounts receivable, and cash | | |receivable, and cash payments |and deposit slips | | |Expenditure |Tracks purchases and inventory,|Purchase orders, receiving |Expense accounts (labor, | | |payments required, and payroll |reports, personnel actions, and|vacation, utilities, and rent),| | | |vendor invoices |inventory accounts, and | | | | |liability accounts (accounts | | | | |payable, taxes payable, wages | | | | |payable, and cash) | |Financing |Tracking and payment of | | | | |long-term debt, stock issuance,| | | | |payment of dividends, and cash | | | |...
References: Apollo Group, Inc. (2006). Riordan Manufacturing. Accounting Information System 1 - overview. Retrieved March 11, 2009. ACC340-Accounting Information Systems Processing. https://ecampus.phoenix.edu/secure/aapd/cist/vop/Business/Riordan/RioMfgHome002.htm
Bagranoff, N., & Simkin, M., & Strand, C., (2008). Core Concepts of Accounting Information
Systems (10th ed.) [University of Phoenix Custom Edition E-text]. New York, NY:
Wiley. Retrieved from University of Phoenix, ACC/340 Accounting Information System 1 Web site.
University of Phoenix (2009). Week five overview. Retrieved March 12, 2009, from University of Phoenix, Week Five, rEsource. ACC340-Accounting Information Systems 1 Course Web site.
University of Phoenix (2009). Week one overview. Retrieved March 12, 2009, from University of Phoenix, Week One, rEsource. ACC340-Accounting Information Systems 1 Course Web site.
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