This preview has intentionally blurred parts. Sign up to view the full document

View Full Document

Unformatted Document Excerpt

185 Econ Lecture 06 Econ 185 Glenn Owen UC Santa Barbara Importance of documentation Document flowcharts System flowcharts Data flow diagrams D t fl di Program flowcharts and decision tables 2 Why? What value added? 3 1 Econ 185 Lecture 06 How the system works Training Designing new systems Controlling development g p Standardization Auditing Documenting business processes Sarbanes-Oxley Accountability 4 Purpose Steps: Identify departments Classify documents and activities Code copies Account for distribution Use connectors Use annotations Note file sequence (alpha, numeric, date) Use acronyms (define) 5 The Berridge Company is a discount tire dealer that operates 25 retail stores in a metropolitan area. The company maintains a centralized purchasing and warehousing facility and employs a perpetual inventory system. All purchases of tires and related supplies are placed through the companys central purchasing department to take advantage of the quantity discounts offered by its suppliers The tires and supplies are received at the central suppliers. warehouse and distributed to the retail stores as needed. The perpetual inventory system at the central facility maintains current inventory records, which include designated reorder points, optimum order quantities, and balance-on-hand information for each type of tire or related supply. 6 2 Econ 185 Lecture 06 The participants involved in Berridges inventory system include (1) retail stores, (2) the inventory control department, (3) the warehouse, (4) the purchasing department, (5) accounts payable, and (6) outside vendors. The inventory control department is responsible for maintenance of the perpetual inventory records for each item carried in inventory. The warehouse department maintains the physical inventory of all items carried by the companys retail stores. All deliveries of tires and related supplies from vendors are received by receiving clerks in the warehouse department, and all distributions to retail stores are filled by shipping clerks in this department. The purchasing department places every order for items needed by the company. The accounts payable department maintains the subsidiary ledger with vendors and other creditors. All payments are processed by this department 7 Retail Store Requisition (Form RSR). The retail stores submit this document to the central warehouse whenever tires or supplies are needed at the stores. The shipping clerks in the warehouse department fill the orders from inventory and have them delivered to the stores. Three copies of the document are prepared, two of which are sent to the warehouse, and the third copy is filed for reference. reference Purchase Requisition (Form PR). An inventory control clerk in the inventory control department prepares this document when the quantity on hand for n item falls below the designated reorder point. Two copies of the document are prepared. One copy is forwarded to the purchasing department, and the other is filed. 8 Purchase Order (Form PO). The purchasing department prepares this document based on information found in the purchase requisition. Five copies of the purchase order are prepared. The disposition of these copies is as follows: copy 1 to vendor, copy 2 to accounts payable department, copy 3 to inventory control department, copy 4 to warehouse, and copy 5 filed for reference. Receiving Report (Form RR). The warehouse department prepares this document when ordered items are received from vendors. A receiving clerk completes the document by indicating the vendors name, the date the shipment is received, and the quantity of each item received. Four copies of the report are prepared. Copy 1 is sent to the accounts payable department, copy 2 to the purchasing department, and copy 3 to the inventory control department. Copy 4 is retained by the warehouse department, compared with the purchase order form in its files, and filed together with this purchase order form for future reference. 9 3 Econ 185 Lecture 06 Invoices. Invoices received from vendors are bills for payment. The vendor prepares several copies of each invoice, but only two copies are of concern to the Berridge Company: the copy that is received by the companys accounts payable department and the copy that is retained by the vendor for reference. The accounts payable department compares the vendor invoice with file its copy of the original purchase order and its file copy of the warehouse receiving report. Based on this information, adjustments to the bill amount on the invoice are made (e.g., for damaged goods, for trade discounts, or for cash discounts), a check is prepared, and the payment is mailed to the vendor. 10 Draw a document flowchart Could the company eliminate one or more copies of its RSR form? Do you think that the company creates too many copies of its purchase orders? Why or why not? 11 Purchase Steps Top to bottom, left to right Standard symbols Input Processing Output Sketch first Include descriptions and comments 12 4 Econ 185 Lecture 06 Carly Riccardi and her mother Nancy own and operate FreezeTime, Inc., a company specializing in freeze-drying flowers from clients memorable events, such as proms and weddings. The company not only freezes the flowers, but also presents them in a variety of display packages. Each of these packages includes materials such as glass and frames that FreezeTime purchases from local suppliers. In display, addition to supplies for display the company purchases office supplies and packaging materials from several vendors. 13 FreezeTime uses a low-end accounting software package to prepare documents and reports. As employees note a need for supplies and materials, they inform Carly or Nancy, who act as office manager and company accountant. Either Carly or Nancy enters order information into the accounting system and creates a purchase order that they fax to the supplier. Occasionally, Carly or Nancy will also call the supplier if there is something special about the product ordered. When ordered materials and supplies arrive at FreezeTimes small factory, either Carly or Nancy checks the goods received against a copy of the purchase order and enters the new inventory into the computer system. 14 Nancy pays bills twice each month, on the first and the fifteenth. She checks the computer system for invoices outstanding, and verifies that the goods have been received. She then enters any information needed to produce printed checks from the accounting system. FreezeTime mails checks and printed remittance advices (portions of the vendor bill to be returned) to suppliers. Requirements: Prepare a systems flowchart for FreezeTimes purchase and payment process. 15 5 Econ 185 Lecture 06 Purpose Context data flow diagram Physical data flow diagram Logical data flow di diagram (l (level 0) L i l d t fl l Logical data flow diagram (level 1) 16 17 18 6 Econ 185 Lecture 06 19 20 Lois Hale and Associates is a medium-size manufacturer of musical equipment. The accounts payable department is located at company headquarters in Asbury Park, New Jersey, and it consists of two fulltime clerks and one supervisor. They are responsible for processing and paying approximately 800 checks each month. The accounts payable process generally begins with receipt of a purchase order from the purchasing department The purchase order is held until a department. receiving report and the vendors invoice have been forwarded to accounts payable. 21 7 Econ 185 Lecture 06 At that time, the purchase order, receiving report, and invoice are matched together by an accounts payable clerk, and payment and journal entry information are input to the computer. Payment dates are designated in the input, and these are based on vendor payment terms. Company policy is to take advantage of any cash discounts offered. If there are any discrepancies among the purchase order, report, receiving report and invoice, they are given to the supervisor for invoice resolution. After resolving the discrepancies, the supervisor returns the documents to the appropriate clerk for processing. Once documents are matched and payment information is input, the documents are stapled together and filed in a tickler file by payment date until checks are issued. 22 When checks are issued, a copy of the check is used as a voucher cover and is affixed to the supporting documentation from the tickler file. The entire voucher is then defaced to avoid duplicate payments. In addition to the check and check copy, other outputs of the computerized accounts payable system are a check register, vendor master list, accrual of open invoices, and a weekly cash requirements forecast. forecast Requirements: Draw a context and physical DFD. 23 8 ... View Full Document

End of Preview

Sign up now to access the rest of the document