ACCOUNTS PAYABLE SYSTEMThe purpose of accounts payable system is
to keep track of amount owed by the organization for the goods
purchased, to pay the suppliers for items purchased and to provide
reports of accounts payable.
The system involved in accounts payable is- The stores
department sends a requisition to the purchase department for
procuring goods mentioned in the requisition. The purchase
department issues a purchase order to an appropriate supplier for
the supply of the goods. The supplier supplies the goods along with
challan which are received by the receiving department. Goods
received are sent to stores department, which makes a stores
receiving report. Supplier sends his invoice to the accounts
department Accounts payable department processes this invoice on
the basis of purchase order, challan, daily receiving report of
receiving department and store receiving confirmation. After
verifying all the records, a voucher is prepared to record the
invoice and a payment to the supplier. This manual processing could
be done automatically as well. The accounts payable department
makes a batch of these payments vouchers and prepares a batch
control slip by deriving the following totals: Record count which
consists of number of payment vouchers in a batch. Hast total e.g.,
total of supplier account numbers. Financial total by adding the
net amount due for each invoice.
This batch control slip is generally processed as a control
record. After the processing of these payment vouchers is
completed, these totals are compared with totals generated by the
computer for authenticity.Thus, the inputs to the accounts payable
system are:- Purchase orders Invoices from suppliers Daily
receiving reports Store receiving confirmation
The outputs from the accounts payable system are: Supplier
payment cheque along with remittance statement Cheque disbursement
register Statement of account payable for the month
To produce the outputs, accounts payable system uses two types
of stored data. First is the accounts payable data, which consists
of one record of each supplier. Accounts payable data consists of
supplier number, invoice data, payment amount, due date, payments
date and amount paid. All fields in this data, except for supplier
number, are repeated for each supplier invoice. The other stored
data used is the supplier master file which contains details
regarding supplier number, suppliers name and address.Processing in
the accounts payable system consists of following activities:- The
supplier invoice is compared with purchase order to determine
whether description of items ordered matches with the description
of the items mentioned in the invoice. The supplier invoice is
compared with receiving report to determine whether the items
billed have actually been received. The supplier invoice is
compared with the store receiving confirmation to determine whether
the items billed have actually been received in the stores. If the
above comparisons are found in order, invoice is processed by the
system to update the accounts payable data, which records the due
payment of invoice. The updated accounts payable data is checked
everyday to see whether any invoice payments are due and when a
payment is almost due, a cheque is prepared. As the cheques are
posted, the accounts payable data is updated to indicate that the
particular invoice has been paid. At the end of the month, the
total accounts payable is computed from the accounts payable data.
The figure shows the accounts payable system diagram
PROCESSINGChecking of purchaseOrder, supplier invoiceReceiving
report and storeReceiving confirmationsChecks payment due
dateComputes total accounts payable INPUTPurchase orderSupplier
invoiceReceiving reportStore receiving confirmation OutputSupplier
chequesAccounts payable reportINPUT
STORAGEAccounts payable dataSupplier master data
ACCOUNTS PAYABLE SYSTEM
Payables edit programEdit and balanceVendor invoicesvvv
Sort by vendor number
Vendor updatereport
Vendor master fileVendor update program
Missing vendor accounts
Payables held overPayables merge program
Payable registerPayables cutoff vendor holdPayables program
Payable to be paid
Vendor chequesPayables cheque program
General ledger reportPayables summary program
Pending payables fileThe functions and properties of these
computer programs are briefly discussed below:(a) Payable edit
program- edits and balances keyed vendor invoice information as
well as edits any vendor change information to be added to the
vendor master file. Those transact which fail to clear various
checks are printed in the error list(b) Vendor update program-
updates the vendor master file, prints a vendor report and
identifies missing vendor accounts. Inputs to the vendor update
program consist of vendor master file and sorted transaction file
of vendors.(c) Payable register program- produces a list of all
vendor invoices to be paid. Before printing the list, however, a
second payable merge is made. This merger combines new payables
transactions with payables which have not been paid.(d) Payable
cheque program- consists of printing the vendor voucher cheques.
Along with the cheques, details of payment e.g. invoice number,
date and amount against which payment is being made is also
printed.(e) Payable summary program-summarizes payable by general
leger codes, i.e; by account categories.The accounts payable system
generates the following reports:-(a) Daily payment list-which
itemizes the invoices processed for payment on a particular
date.(b) Cheque register- is the permanent record of payments made
to vendors.(c) Accrued liability report-is a summary of all unpaid
liabilities at the times of closing, which provides the basis for
recognizing legitimate obligations to outsiders.(d) Cash
forecasting-provides information for preparation of short range
cash payment forecast.(e) Discrepancy reporting- as the computer
performs the programmed audits of the documents supporting payment,
discrepancies which require action on the part of vendors may be
brought to the attention through the automatic preparation of
vendor advisory messages read for mailing.
PAYROLL SYSTEMThe employee payroll represents a business
expense. The purpose of payroll system is to prepare pay cheques
for their employees, payslips and to provide payroll reports.
Payroll is one of the most important computer applications. The
process involves collecting of details of number of days for which
each employee has worked in a month through his attendance card,
computing gross pay, deduction and net pay.
Computer based payroll system helps in making prompt and
accurate payments to employees as well as reports to management,
employees and government agencies concerning earnings, taxes and
other deductions. They also provide reports analyzing labour costs
and productivity, which may be very helpful for the
management.Maintenance of employee master file is a major task
associated with payroll processing. Employee master file contains
the following details:-(a)Employee pay status(b)Employee
identificationEmployee codeDepartment codeEmployee nameEmployee
addressBank account numberSexDate of birthDate of joining(c) Wage
and salary informationSalary rateOvertime rateVoluntary
deductions(d)Current payroll informationCurrent gross payCurrent
dearness allowanceCurrent house rent allowanceCurrent voluntary
deductionsCurrent tax deductionsCurrent net pay(e)Year to date
payroll informationYTD gross payYTD Income taxYTD net payThe layout
of employee master file helps to clarify the relationships between
the recording of number of days worked by an employee and printing
of the employee pay cheque. There may be several changes which must
be made in the payroll master file every month before payroll
processing is done. After incorporating the changes in the payroll
master file, the information contained in the payroll transaction
file is entered. The payroll transaction file contains the
following information:-Employee codeNumber of days workedOvertime
hoursSpecial deductionsThe figure shows the processing of
payroll:
OUTPUTPay chequesPay slipsPayroll reportINPUTEmployee work
report data contained in payrollPayroll master
filePROCESSINGCompute payroll dataCompute payroll totals
STORAGEEmployee work dataEmployee master data
THE PAYROLL SYSTEMThe input to the payroll system is the
employee work report data, which indicates how much the employee
has worked. The outputs from the system include the pay cheques,
payslips in which details of salaries under different heads and
deductions made on account of income tax, loan investments,
provident fund, etc. are indicated, and the net play.To produce the
output, the system stores employee work data from the employee
attendance cards. The system also requires employees master data.
Payroll processing involves using the employee work data and master
data to calculate payroll data for each employee.The batch
processing of payroll transaction is explained in figure:
Edit and balance reportPayroll edit programsTime cards
Sort by employment code
Payroll register
Employee master filePayroll register program
Employee pay cheques Payroll cheque program
Payroll journal programThe first step in processing is the entry
of keyed attendance card information. After data entry, following
four programs are required in computer processing:-(a)Payroll edit
program- detects errors in input data. The reported errors are
rectified and the edit program is re-runed to produce an errors
free input file.(b)Payroll register program- produces a printed
register of the amounts to be paid to the employees.(c)Payroll
cheque program- produces employees pay cheques and pay
slips.(d)Payroll journal program-summarizes the results of payroll
processing, generally by general ledger code. With this, payroll
expenses can be entered directly into the financial statementsAt
the end of the year, the completed master payroll file is used to
print annual reports. These reports may be used for income tax
computation and provident funds returns. The various outputs of
payroll system are:-(a) Payroll register and master file-payroll
register and master file are one of the most useful outputs of the
payroll system(b) Payroll deductions report-itemizes the total
voluntary deductions for each employee by specific agency funds(c)
Periodic payroll and summary deductions-is the summary of payroll
activity for the month and year to date.(d) Cheque register-lists
the cheques issues to employees to cover payroll liability.SALES
ORDER PROCESSING SYSTEM
Sales order processing is an important transaction processing
system which captures and processes customer orders and produces
invoices for the customers and data required for sales analysis and
inventory control.It can also keep track of the status of customer
orders until goods are delivered. Computer based sales order
processing systems provide a fast, accurate and efficient method of
recording and screening customer orders and sales transactions.
They also provide information to inventory control systems on
accepted orders to ensure that they can be executed as quickly as
possible. sales order processing system consists of- Order entry
system Billing system Accounts receivable system
Order entry systemThe purpose of order entry system is to- Speed
the processing of a customers purchase order Prepare the orders in
a form that can be used by the business.The functions of order
entry system are summarized in figure-
OUTPUTSales orders PROCESSSINGCheck inventory quantityCheck
customer credit INPUTCustomer order data
STORAGECustomer order dataInventory master dataCustomer master
data
As shown in the figure the input system is the customer order
data, which would be received on an order entry form or over the
telephone. The output of the system is the sales order. The
customer orders may be entered into the systems as they are
received, or orders may be collected and entered in batches
periodically.The system involves two programs and a manual
procedure. One program is needed for data entry, data validation
and storage of customer order data. Another program is needed to
access the inventory master data, the customer master data and the
customer order data, and to produce the sales order. These programs
are executed in sequence. A manual procedure is needed to correct
errors in the customer order.The figure below shows batch
processing design of order entry system-
Sort by customer numberOrder entry edit programEdit and balance
reportCustomerorder
Customer credit reportCustomer master fileCustomer order entry
program
Missing product accountsSort by product number
Product master file
Product order entry posting program
Updated suspense filePicking slips
Order entry packaging slip program
Order entry summary programPacking slips
Approved invoice transactions
(a)order entry edit program-examines keyed input for correctness
and produces an edit and balance report. This keyed information is
extracted from the customer purchase orders and consists of record
code, customer account number, purchase order number, product
numbers, specified delivery date.(b)customer order entry posting
program-examines each edited customer purchase order to determine
whether the customer account is new or is already existing in the
customer master file.(c) product order entry posting
program-transfers information from the product master file to the
order entry transaction file. Processing is initiated by a sort
operation, the transaction file is sorted by product
number.(d)order entry picking program-consists of printing picking
slips to instruct members of warehouse staff regarding products
which need to be packed and shipped to the customers.(e)order entry
packing slip program-includes making adjustments to customer
orders, adding freight charges to orders, printing packing slips to
be included with shipped products.(f)order entry summary
program-recaps order entry activities, writes back orders and
future orders to a combined back order future order file and
creates an approved invoice file