Page 73 - Accounting Information Systems

44 PART I Overview of Accounting Information Systems

physical and a financial component, which are processed separately. The primary subsystems of the reve-
nue cycle, which are the topics of Chapter 4, are briefly outlined below.
Sales order processing. The majority of business sales are made on credit and involve tasks such as
preparing sales orders, granting credit, shipping products (or rendering of a service) to the customer,
billing customers, and recording the transaction in the accounts (accounts receivable, inventory,
expenses, and sales).

Cash receipts. For credit sales, some period of time (days or weeks) passes between the point of sale
and the receipt of cash. Cash receipts processing includes collecting cash, depositing cash in the bank,
and recording these events in the accounts (accounts receivable and cash).

Accounting Records

MANUAL SYSTEMS
This section describes the purpose of each type of accounting record used in transaction cycles. We
begin with traditional records used in manual systems (documents, journals, and ledgers) and then exam-
ine their magnetic counterparts in computer-based systems.

Documents
A document provides evidence of an economic event and may be used to initiate transaction processing.
Some documents are a result of transaction processing. In this section, we discuss three types of docu-
ments: source documents, product documents, and turnaround documents.

SOURCE DOCUMENTS. Economic events result in some documents being created at the beginning
(the source) of the transaction. These are called source documents. Source documents are used to capture
and formalize transaction data that the transaction cycle needs for processing. Figure 2-2 shows the crea-
tion of a source document.
The economic event (the sale) causes the sales clerk to prepare a multipart sales order, which is formal
evidence that a sale occurred. Copies of this source document enter the sales system and are used to

FI GU RE
2-2 CREATION OF A SOURCE DOCUMENT

1
Customer's Source
Order Document 2
Data 3
Collection Sales Order

Sales
System