USING I.T. IN ACCOUNTING PROCEDURES
SECTION 1
Using information technology in accounting procedures
Information technology (IT) is the recording and use of information by
electronic methods. It is widely used throughout society nowadays
mostly as a result of the internet and the world wide web being used to
make people more conversant with using technology in their everyday
lives.
This is why we now live in what is known as the ‘Information Age’.
Most modern organisations are also heavily reliant on computers. Their
systems and procedures have been adapted from manual to
computerised methods to ensure they remain competitive within their
marketplace. These computerised systems are known as Management
Information Systems (MIS).
This move from manual methods to computerisation has also enhanced
an organisation’s communication, allowing businesses to collect, process
and transmit information quickly and easily. Decision making becomes
more effective which in turn leads to a more efficient business.
The information itself has also been enhanced as it fulfils the
characteristics of good-quality information in that it is accurate,
complete, available, timely and up to date.
This change has also affected accounting and finance within an
organisation. Whereas most information used to be historical, allowing
decisions to be made on the basis of past events, businesses now require
up-to-the-minute information to be available immediately. This has
resulted in accounting systems and procedures becoming computerised
to allow them to integrate with an organisation’s MIS.
These Accounting Information Systems (AIS) have dramatically increased
the financial transaction process.
This process follows the same procedures whether electronic or manual:
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING I.T. IN ACCOUNTING PROCEDURES
Process
!
Transactions
!
Collect
(Input)
Accounting system
Transmit
(Output)
Reports
We are all familiar with the use of bar codes and scanners in large retail
establishments, and now even small corner shops have started using this
method of recording financial transactions.
Scanners complete the collect, process and transmit procedures in the
following way:
COLLECT
Data is collected by inputting the bar code at the
cash point by means of a scanner. The scanner
reads the code and sends the data to a central
processing unit.
!
PROCESS
The central processor processes this code into
specific information about the items being
scanned, such as supplier, article name, size and
price.
!
TRANSMIT
This information is transmitted back to the cash
point where the output is a price display and a till
receipt.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING I.T. IN ACCOUNTING PROCEDURES
The use of bar codes and scanners has also changed the way in which
supermarkets control their stock. It used to be necessary to carry out
regular stock checks and retain large amounts of stock in storerooms
within the store itself.
Now a running stock check is available as each time an item is scanned
the stock record is automatically reduced by one. This information
would also be relayed to a central warehouse where stock is stored and
when a minimum level is reached, a delivery would be arranged, often
on a 24-hour basis.
This system has saved both time and money in terms of no longer having
to carry out manual stock checks but also in terms of no longer having
to pay for large areas of the supermarkets to be used as stock rooms.
The computerised system can also be set up to automatically pay
invoices by electronic means.
We are also familiar with the use of cash and credit cards which can be
used to obtain instant cash or pay bills electronically.
COLLECT
When the card is swiped the data obtained from
the card number is sent to the central processor.
!
PROCESS
The data is processed by firstly checking the card
number against a list of stolen or lost cards. If the
result of this search is negative, the bill amount is
checked against the bank account balance.
!
TRANSMIT
An acceptance signal is then relayed back and a
transaction voucher printed for the purchaser to
sign.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING I.T. IN ACCOUNTING PROCEDURES
Tasks
1.
What is the term used to describe electronic systems and
procedures within an organisation?
2.
What method could an organisation use to communicate internally
using IT?
3.
Complete the following diagram to illustrate the input, process
and output for a tin of beans being scanned at a supermarket:
INPUT
!
PROCESS
!
OUTPUT
4.
Complete the following diagram to illustrate a switch card
transaction to request money at a cash machine.
INPUT
!
PROCESS
!
OUTPUT
4
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING I.T. IN ACCOUNTING PROCEDURES
5.
Explain how using bar codes and a scanner maintains stock levels
automatically.
6.
Identify four characteristics of good-quality information.
7.
Explain why the four characteristics identified above are important.
8.
Explain how IT could enhance these characteristics.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING INTEGRATED SOFTWARE IN ACCOUNTING
SECTION 2
Using integrated software in accounting
Accounting information is of paramount importance to an organisation.
The more accurate and up-to-date the information the more effective
the decisions made based on it will be.
For this reason businesses must think carefully about which software
they should use to meet their financial requirements.
Large national or multinational organisations will normally have software
produced specifically for them to meet their needs and to suit their
working practices and procedures. This is known as customised
software.
However, this is very costly and it takes time to have a specific package
written.
Most small or medium-sized firms will therefore buy ready-written
software over the counter which often results in them having to change
their procedures to work within the software system.
Nevertheless, the savings in time and money usually outweigh the
disadvantages to these small or medium sized firms as the software is
normally user-friendly and enhances their working practices in the long
term.
These software packages can vary, but products containing spreadsheet,
database and word processing packages are typically used as they are
very versatile and allow integration between packages.
Word processing
This simplifies the creation and editing of text. It has features such as
deleting, moving and copying text, as well as enhancing text in terms of
emboldening, underlining or italicising.
It also allows font sizes and styles to be changed, and the availability of a
spell and grammar check facility all result in the production of
professional documentation.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING INTEGRATED SOFTWARE IN ACCOUNTING
It can also ensure that documents are consistent in terms of
presentation to enhance a company’s reputation.
The word-processing package could be used to:
• send letters to clients
• ‘mail merge’ standardised letters to numerous clients using a
database to provide the client details
• prepare templates for invoices or purchase orders
• prepare company reports or legal documents.
Spreadsheets
These electronic worksheets make it possible for calculations to be
carried out accurately and relatively simply.
Calculations including totalling and averaging can be performed as well
as ratios and ‘What if’ scenarios. These ‘What if’ calculations can be used
to provide figures which could result in different situations.
The spreadsheet package could be used to:
•
•
•
•
prepare Trading, Profit & Loss Accounts
produce Balance Sheets
produce charts and graphs
prepare budget forecasts.
Databases
Databases are electronic filing systems which allow specific pieces of
information to be keyed into fields with all the fields for one item being
known as a record. These can be sorted as required and searched to
find records matching specific criteria.
They can also be edited and deleted as required. The database package
could be used to:
• record client details
• search for specific clients, for example, those who owe more than
£15,000
• carry out simple calculations
• present information in the form of lists, reports and forms.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING INTEGRATED SOFTWARE IN ACCOUNTING
Tasks
9.
Describe the following software applications and list three features
of each:
• word processing
• spreadsheets
• databases.
10.
Identify which application(s) would be used to complete the
following tasks:
Task
Application
Produce a report for senior
management illustrating
up-to-date sales figures in the
form of a chart
Send a letter to all clients
who have overdue
accounts
Prepare a Trading,
Profit & Loss Account
Store details of clients
11.
Explain the term customised software?
12.
Why do small and medium-sized companies normally buy readywritten software packages?
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING INTEGRATED SOFTWARE IN ACCOUNTING
13.
A small local printing firm presently using a manual system is
having problems with overdue unpaid invoices. To advise clients
of this they have to look through client record cards to identify
unpaid bills and write individual letters to these clients. Explain
how integrated software could be helpful to this small business
using the Input, Process and Output model:
INPUT
!
PROCESS
!
OUTPUT
14.
Working with a partner, determine how a small joinery business
could use an integrated software package of word processing,
spreadsheet and database applications.
List at least three uses for each of the software packages.
10
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
WHY USE INFORMATION TECHNOLOGY?
SECTION 3
Why use information technology?
As we have seen, organisations have incorporated IT into their working
practices to ensure that they remain competitive and profitable.
Computers can process data far more quickly than manual procedures
and cut down on the need for many routine tasks and information being
duplicated by different departments. Files can be set up by one
department and shared by all the others.
When using software packages such as word processing, spreadsheets
and databases, text can be recalled and edited as required instead of a
document having to be typed up from the beginning again.
Figures can be keyed in once then used over and over again to forecast
the outcome of different scenarios.
However, there are disadvantages too. Staff may be worried by the
changes that take place when systems are computerised. They worry
about not being able to work with the new technology or even that they
might lose their jobs.
There is also always the possibility of equipment developing problems or
servers being brought down by viruses or technical faults.
Employers can overcome these problems by ensuring that their
equipment is serviced regularly and that they have technicians on the
premises to deal with any problems that arise.
They can also make sure their staff are involved in the whole process of
change, by reassuring them about job losses and training them
appropriately to undertake the work they will be involved in.
If organisations deal with change effectively, staff morale will rise and job
satisfaction increase as employees learn new skills and productivity
increases as work is completed more quickly and accurately.
No matter what problems may be encountered, IT will invariably
improve working conditions, save time and money and improve
decision making and communication.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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WHY USE INFORMATION TECHNOLOGY?
Tasks
15.
Complete the following table listing the advantages and
disadvantages to an organisation of changing from manual to
electronic procedures using IT.
Advantages
16.
Disadvantages
Working in groups, prepare a presentation to a medium-sized
organisation that currently employs two accountants and two
clerical assistants to deal with their financial transactions.
You are advising them of the possible costs (disadvantages) and
benefits (advantages) of installing an AIS.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SPECIALISED ACCOUNTING PACKAGES
SECTION 4
Specialised accounting packages
As already stated, some organisations have specialised packages written
for them so that every procedure they want carried out is taken into
account.
However, there are specialised accounting packages available which are
ready written for organisations to use. These can be customised to suit
many needs and are written in a user-friendly style with menus and help
screens to assist the user.
There is a range of packages available and a business would have to take
account of various factors before deciding on which to purchase and
install. These include:
•
•
•
•
•
cost of buying and installing the required hardware
cost of buying and installing software
cost of training staff to use software
what tasks have to be carried out
whether manual procedures would have to be changed to begin using
the new software.
It would usually be necessary to compromise in some way when buying a
ready-written package, but once any problems had been dealt with the
benefits would soon become apparent.
Of course, large and profitable businesses would be in a position to
approach a software manufacturer who would design a package
specifically for them to meet their every requirement.
Tasks
17.
Go to the Sage internet website at www.artisan.co.uk
(a)
Identify the three points that Artisan use to sell their software
solutions.
(b)
Name three business processes that Artisan software claims to
simplify.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
SECTION 5
Using spreadsheets for recording and apportioning cost
elements
We will now use Microsoft Excel to deal with the following accounting
problems:
Task 18
Eatables Ltd is a catering firm which supplies pre-packaged foods to
various retail outlets.
They must complete a process to allow each job to be costed
individually, ensuring that all costs (direct and indirect) are covered. To
do this they must absorb annual overheads for each department into the
estimated cost for each job.
They have three production departments: Preparation, Processing and
Packaging. The following costs have been budgeted for next year.
Overhead
Total
Rent and Rates
£25,000
Building Insurance
£12,000
Canteen Costs
£10,000
Depreciation of Machinery
Card 1
£8,000
The absorption rates for each department are as detailed below:
Preparation
Processing
Packaging
Area (sq m)
3,400
2,300
1,800
No. of Employees
5
6
8
Value of Machinery
£45,000
£35,000
£85,000
Value of Buildings
£85,000
£55,000
£35,000
Card 2
Open up a new spreadsheet and save as Eatables Ltd.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
15
USING SPREADSHEETS
Key in the following spreadsheet template and save as Eatables Ltd.
A
1
B
C
D
E
F
Eatables Ltd
2
3
Overheads
4
Rent and Rates
5
Building Insurance
6
Canteen Costs
7
Depreciation of
£
Machinery
8
9
Overhead
Apportionment
10
11
Area (sq m)
12
No. of Employees
13
Value of Machinery
14
Value of Buildings
Preparation
Processing Packaging
Total
Basis
Preparation Processing Packaging Total
15
16
Overhead Analysis
Statement
17
Overheads
18
£
19
Rent and Rates
20
Building Insurance
21
Canteen Costs
22
Depreciation of
£
Machinery
23
Dept Totals
To wrap text such as Overhead
to be apportioned in cells –
highlight cell, right click
mouse, select Format Cell.
Select Alignment and click on
wrap text/OK.
!
It is now necessary to format
cells to ensure they contain
the correct type of figures.
16
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
£
£
USING SPREADSHEETS
Highlight columns B–F by clicking on the grey area at the top of the
columns and dragging mouse over until all the columns are selected.
Right click the mouse and
select Format Cells.
Select Number/Number and
0 decimal points.
It is now necessary to transfer
figures onto the spreadsheet.
Cells B4–B7 can be filled using the figures given for the total overheads
for each department on Card 1. In B4 key in the total rent and rates
overheads, £250,000, B5 – total Building Insurance overhead £12,000.
In B6 and B7 key in total overheads for Canteen Costs and Depreciation
of Machinery.
Cells B11 to D14 will contain the overheads apportioned to each
department as contained in Card 2.
In cell B11 key in the apportioned overhead for the Area (sq m) of the
Preparation Department – 3,400. Complete this for the Processing and
Packaging Departments in cells C11 and D11.
Key in the No. of Employees for each department in cells B12–D12.
Key in the Value of Machinery for each department in cells B13–D13.
Key in the Value of Buildings for each department in cells B14–D14.
To total the rates for each department:
In cell E11 key in:
=SUM(B11:D11) and press enter.
To copy this formula down:
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING SPREADSHEETS
Click back in cell E10. Move mouse over bottom right-hand corner of
cell until the white cross changes into a black cross. Click mouse button
and drag down over cell E12, E13 and E14.
Check your spreadsheet:
9
Overhead Apportionment
10
Preparation
Processing
Packaging
Total
11 Area (sq m)
3,400
2,300
1,800
7,500
12 No. of Employees
5
6
8
19
13 Value of Machinery
£45,000
£35,000
£85,000
£165,000
14 Value of Buildings
£85,000
£55,000
£35,000
£175,000
The next section to be completed is overhead analysis.
The first task to be carried out is to identify the correct basis for
apportioning.
This involves looking at the type of overhead to be apportioned and
identifying the most appropriate basis of apportionment.
The overheads we have are:
• Rent and Rates
• Building Insurance
• Canteen Costs
• Depreciation of Machinery.
The Basis of Apportionment are:
• Area (sq m)
• No. of Employees
• Value of Machinery
• Value of Buildings.
Consider first Rent and Rates. Which basis would be most suitable? As
rent and rates are based on the size of the building, you would select
Area (sq m).
Click in cell B19. Instead of keying in the text again key in the = sign
and click on the cell containing the text, that is A11.
Building Insurance would be based on the value of the building. Click
in cell B20 key in = and click on the cell containing the appropriate
text, that is A14.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
Canteen Costs would be represented by the No. of Employees – insert
this in cell B210.
Depreciation of Machinery would be Value of Machinery – insert this in
cell B22.
Once the most appropriate basis of apportionment has been decided,
formulae must be keyed in to calculate how the total overheads to be
apportioned are absorbed into the production areas.
The formula calculates the basis of apportionment figures for each
department divided by the basis total multiplied by the total overhead.
Before we carry out this calculation it is necessary to understand the
term ‘absolute cell reference’.
If you don’t want Excel to adjust references when you copy a formula to
a different cell, you must use an absolute reference. For example, if your
formula multiplies cell A5 with cell C1 (=A5*C1) and you copy the
formula to another cell, Excel will adjust both references. You can create
an absolute reference to cell C1 by placing a dollar sign ($) before the
parts of the reference that do not change. To create an absolute
reference to cell C1, for example, add dollar signs to the formula as
follows:
=A5*$C$1
Another way is to key in the cell reference then click on the key F4 on
the keyboard.
Doing this allows you to copy formulae over cells thus saving you keying
individual formulae into each cell.
To perform this calculation in cell C19:
• Key in =
• Click on the cell containing the appropriate basis of apportionment
for Rent and Rates (Area sq m) figure for the Preparation Department,
that is B11
• Key in the divide sign /
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
19
USING SPREADSHEETS
• Click in the cell containing the basis of apportionment total, that is
E11
• Press F4
• Key in the multiplication sign *
• Click in the cell containing the total Rent and Rates overhead, that is
B4
• Press F4
• Press Enter.
As we have used absolute cell reference we can now copy the formulae
across cells D19 and E19.
To calculate the Buildings Insurance overhead to be allocated to each
department:
• Click in cell C20
• Key in =
• Click in the cell containing the appropriate basis of apportionment
figure for Building Insurance for the Preparation Department, that is
B14
• Key in the divide sign /
• Click in the cell containing the basis of apportionment total, that is
E14
• Press F4
• Key in the multiplication sign *
• Click in the cell containing the total Building Insurance overhead,
that is B5
• Press F4
• Press Enter.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
Now copy over cells D20 and E20.
Complete the Overhead Analysis Statement for the three Production
Departments for Canteen Costs and Depreciation of Machinery.
Complete the total columns by keying in:
=SUM(C19:E19)
Copy this formula down cells F20–F22.
Total each department by clicking in cell C23:
=SUM(C19:C22)
Copy this formula over cells D23 and E23.
Check your figures:
16
Overhead Analysis
Statement
17
Overheads
Basis
19
Rent and Rates
Area (sq m)
20
Building Insurance
21
Canteen Costs
22
Depreciation of
18
Machinery
23
Dept Totals
Preparation
Processing
Packaging
Total
£
£
£
£
11,333
7,667
6,000
25,000
Value of Buildings
5,829
3,771
2,400
12,000
No. of Employees
2,632
3,158
4,211
10,000
8,000
Value of Machinery
2,182
1,697
4,121
21,975
16,293
16,732
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
21
USING SPREADSHEETS
Task 19
Canterbury Catering is an outside catering company which supplies
banquets and buffets for special events.
To cost specific jobs they must absorb their annual overheads to allow a
job cost to be produced.
They have three production departments namely Team 1, Team 2 and
Team 3 who carry out the processes required to prepare the buffet food.
Key in the following spreadsheet and save as Canterbury Catering.
A
1
B
C
D
E
F
Team 1
Team 2
Team 3
Total
Basis
Team 1
Team 2
Team 3
Total
£
£
£
£
Canterbury
Catering Ltd
2
3
Overheads
4
Rent
5
Insurance (Building)
6
Insurance
£
(Machinery)
7
Supervision
8
9
Overhead
Apportionment
10
11 Area (sq m)
12 No. of Employees
13 Value of Machinery
14 Value of Buildings
15
16 Overhead Analysis
Statement
17 Overheads
18
19 Rent
20 Insurance (Building)
21 Insurance
(Machinery)
22 Supervision
23 Dept Totals
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
Wrap text in row and column headings as appropriate.
Format cell in columns B–F for number with 0 decimal points.
The total overheads to be apportioned to all three departments are
listed on Card 1 below:
Overhead
Total
Rent
£37,000
Insurance (Building)
£22,000
Insurance (Machinery)
£25,000
Supervision
£38,000
Card 1
The department absorption amounts are as detailed on Card 2 below:
Team 1
Team 2
Team 3
Area (sq m)
5,500
6,450
7,000
No. of Employees
10
12
14
Value of Machinery
£25,000
£32,000
£43,550
Value of Buildings
£74,000
£45,000
£64,500
Card 2
Key the total overheads into cells B4–B7.
Key the absorption amounts into cells C11–C14.
Key in formula to total the three departments in cells E11–E14.
Decide on the most appropriate basis of allocation for each overhead as
in Task 18 and enter this information into cells B19–B22.
Insert formula into cell C19 to calculate how the total overheads will be
absorbed into the production areas.
Remember to use absolute cell references to allow formula to be copied
and ensure you are referring back to the correct basis of apportionment.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
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USING SPREADSHEETS
Let’s do the first formula together:
• In cell C19 key in:
• =
• click in the cell containing the basis of allocation figure for Team 1,
that is B11
• /
• click in the cell containing the total basis of allocation figure for all
three teams, that is E11
• press F4 to make this cell absolute
• *
• click in the cell containing the appropriate total overhead (Rent) that
is B4
• press F4
• press enter
Copy this formula over for each Team.
Complete the calculations for each overhead to be absorbed.
Total each overhead for all three teams by inserting an appropriate
formula in F19 and copying down.
Total each team’s overheads
by inserting an appropriate
formula in C23 and copying
over.
Select View/Header and Footer/
Custom Footer and insert name
and task number, click OK.
Click on Page and select
Landscape and Fit to 1 page.
Click OK.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
Print a copy of the spreadsheet showing figures.
To print a copy of the spreadsheet
showing formulae:
!
Select Tools/Options and click on
Formula/OK.
Print a copy of the spreadsheet
showing figures.
Task 20
Chestnut Fencing Ltd supply and erect fences and garden sheds.
They have three production departments: Groundwork, Setting and
Displaying.
The total overheads to be apportioned to all three departments are
listed on Card 1 below:
Overhead
Total
Rent and Rates
£55,000
Insurance (Building)
£47,000
Machinery Depreciation
£32,000
Supervision
£54,000
Card 1
The department absorption amounts are as detailed on Card 2 below:
Groundwork Setting
Displaying
Area (sq m)
2,300
1,500
2,450
No. of Employees
15
10
20
Value of Machinery
£1,400
£16,000
£2,400
Value of Buildings
£1,500
£1,430
£4,320
Card 2
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
25
USING SPREADSHEETS
Prepare a spreadsheet template to contain the above information
remembering to format cells as appropriate and save as Chestnut
Fencing.
• Key in total overheads and absorption amounts.
• Key in formula to calculate total absorption amounts.
• Decide on the most appropriate basis of apportionment.
• Key in formula to calculate how the total overheads will be absorbed
into the production areas (remember absolute cell reference).
• Key in formula to calculate the three departments overheads.
• Key in formula to calculate each department total overheads.
• Key in appropriate footer.
• Print out copy of spreadsheet showing figures.
• Print out copy of spreadsheet showing formulae.
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING SPREADSHEETS
Task 21
Bart’s Bakery supplies a range of bakery products to the public.
To cost specific jobs they must absorb their annual overheads to allow a
job cost to be produced.
They have three production departments, namely Raw Materials, Baking
and Finishing, which carry out the processes required to prepare the
products.
The costs required to complete a spreadsheet showing an Overhead
Analysis Statement are as follows:
The total overheads to be apportioned to all three departments are
listed on Card 1 below:
Overhead
Total
Rent and Rates
£24,500
Heat and Light
£145,000
Machinery Insurance
£28,000
Canteen Costs
£14,000
Card 1
The department absorption amounts are as detailed on Card 2 below:
Raw Materials
Baking
Finishing
Area (sq m)
34,000
45,670
14,350
No. of Employees
25
15
18
Value of Machinery
£25,000
£32,500
£12,500
Value of Buildings
£32,400
£21,450
£13,245
Card 2
Complete a spreadsheet and print out copy of figures and formulae.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
27
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USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING WORD PROCESSING AND SPREADSHEETS
SECTION 6
Using word processing and spreadsheets to solve accounting
problems
Use Microsoft Word and Microsoft Excel to carry out the following tasks:
Task 22
You are the Finance Manager of Eatables Ltd. The Managing Director
has sent you a memo requesting the total budgeted overheads for next
year.
Key in the following memo in a word processing document and save as
Eatables Ltd:
MEMORANDUM
To: Managing Director
From: Finance Manager
Date: Insert Today’s Date
Subject: Budgeted Overheads
Please find detailed below the total budgeted
overheads for next year as requested in your
memo.
Press return twice at the end of the memo.
Open up the Excel spreadsheet for Eatables Ltd.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
29
USING WORD PROCESSING AND SPREADSHEETS
You will now copy over the required information from the spreadsheet
to the word processing document.
Highlight the cells containing the total budgeted overheads, that is
A4–B7.
Right click and copy.
!
Return to the memo, right
click and paste. Highlight
spreadsheet information
and insert a border.
Insert a suitable footer and
print.
Task 23
Reply to a memo from the Board of Directors of Canterbury Catering
requesting the total budgeted overheads for next year. Insert
appropriate details from their spreadsheet.
Insert suitable footer and print.
Task 24
Send a memo to the General Manager of Chestnut Fencing Ltd detailing
the total budgeted overheads in the form of a graph.
• Key in memo
• Open spreadsheet and highlight cells containing total overheads.
• Click on chart wizard icon
• Select column chart and next
• Click next
• Insert suitable chart title and next
30
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
USING WORD PROCESSING AND SPREADSHEETS
• Select ‘as new sheet’ and finish
• Highlight chart
• Select Edit/Copy
• Return to memo
• Select Edit/Paste
• Insert suitable footer and print.
Task 25
Send a memo to the Managing Director of Bart’s Bakery illustrating next
year’s total budgeted overheads in the form of a pie chart. At Step 3 of
the chart wizard select Data Type and percent.
Insert header and print.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
31
32
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
SECTION 7
1.
Management Information System
2.
e-mail
3.
INPUT
Bar code scanned and code number input into
computer system.
!
PROCESS
Code number sent to central processing unit where
supplier, size and price details are obtained and
information sent back to cash point.
!
OUTPUT
Till receipt produced showing article details and
price.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
33
SOLUTIONS TO TASKS
4.
INPUT
Card swiped by machine and card number sent to
central processor.
!
PROCESS
Card number checked against lost or stolen cards.
Account checked to match balance with amount.
!
OUTPUT
Transaction voucher printed and money paid out.
5.
Information relayed via bar code and scanner to stock records.
Item being sold reduces stock levels automatically and exact levels
can be accessed at any time.
6.
Accurate, complete, available, timely and up-to-date.
7.
To ensure effective decision making with good quality information.
8.
By ensuring information can be accessed at any time; by making
information more accurate and up-to-date.
9.
Word processing
Create and edit text
Enhance text
Change font and size
Produce consistent documents
Uses
Letters to clients
Mail merge letters to groups of clients
Prepare reports
34
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
Spreadsheets
Electronic worksheets
Perform calculations such as totalling and averaging
Prepare ratios
Carry out ‘What if’ scenarios
Uses
Prepare accounts, Balance Sheets
Produce charts and graphs
Databases
Electronic filing system
Edit and delete data
Sort fields
Search for specific criteria
Uses
Record client details
Search for specific client groups
Carry out simple calculations
10.
Task
Application
Produce a report for senior
management illustrating
up-to-date sales figures in the
form of a chart
Word processing and spreadsheet
Send a letter to all clients who
have overdue accounts
Word processing and database
Prepare a Trading, Profit & Loss
Account
Spreadsheet
Store details of clients
Database
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
35
SOLUTIONS TO TASKS
11.
Large national or multinational organisations will normally have
software produced specifically for them to meet their needs and to
suit their working practices and procedures. This is known as
customised software.
12.
To save time and money.
13.
INPUT
Client records onto database.
!
PROCESS
Search database for specific criteria.
Word process standard letter.
Mail merge client details for database research.
!
OUTPUT
Print out mail merge letters.
14.
Word processing – leaflets to potential customers; invoices to
existing customers; letters to existing customers; quotes to
customers; company reports.
Database – record client details; record supplier details; search for
specific customers to offer deals; calculate employee wages.
Spreadsheet – produce Trading, Profit & Loss Account; produce
Balance Sheets; produce charts and graphs for use in company
report; produce budget forecasts.
36
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
15.
Advantages
Disadvantages
Remain competitive
Staff worried by changes in case
they cannot use new technology
Cuts down routine tasks
Staff worried they might lose
their jobs
Text can be recalled and edited
Problems as a result of
technological faults
Figures can be used to forecast
different scenarios
Problems as a result of viruses
16.
Students will produce individual responses.
17.
(a)
Robust, flexible accounting software that fits around your
existing business processes;
First-class support services including remote assistance via
desktop takeover;
24 years’ experience and success helping clients from small
companies to multinationals.
(b)
Ledgers & Accounting, Sales & Purchasing Processes, Stock
Management, Project & Job Costing, Asset Management &
Internal Purchasing, Payroll and General Reporting.
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
37
SOLUTIONS TO TASKS
18.
A
1
B
C
D
E
Processing
Packaging
Total
F
Eatables Ltd
2
3
Overheads
£
4
Rent and Rates
25,000
5
Building Insurance
12,000
6
Canteen Costs
10,000
7
Depreciation of
Machinery
8,000
8
9
Overhead
Apportionment
10
Preparation
11
Area (sq m)
3,400
2,300
1,800
7,500
12
No. of Employees
5
6
8
19
13
Value of Machinery
45,000
35,000
85,000
165,000
14
Value of Buildings
85,000
55,000
35,000
175,000
Overheads
Basis
Preparation
Processing Packaging Total
£
£
19
Rent and Rates
Area (sq m)
20
Building Insurance
21
Canteen Costs
22
Depreciation of
15
16
Overhead Analysis
Statement
17
18
Machinery
23
38
Dept Totals
£
£
11,333
7,667
6,000
25,000
Value of Buildings
5,829
3,771
2,400
12,000
No of Employees
2,632
3,158
4,211
10,000
8,000
Value of Machinery
2,182
1,697
4,121
21,975
16,293
16,732
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
Eatables Ltd
Overheads
£
Rent and Rates
25,000
Building Insurance
12,000
Canteen Costs
10,000
Depreciation of
Machinery
8,000
Overhead
Apportionment
Preparation
Processing
Packaging
Total
Area (sq m)
3,400
2,300
1,800
=SUM(B11:D11)
No of Employees
5
6
8
=SUM(B12:D12)
Value of Machinery
45,000
35,000
85,000
=SUM(B13:D13)
Value of Buildings
85,000
55,000
35,000
=SUM(B14:D14)
Basis
Preparation
Processing
Packaging
£
£
Overhead Analysis
Statement
Overheads
Total
£
£
Rent and Rates
=A11
=B11/$E$11*$B$4 =C11/$E$11*$B$4 =D11/$E$11*$B$4 =SUM(C19:E19)
Building Insurance
=A14
=B14/$E$14*$B$5 =C14/$E$14*$B$5 =D14/$E$14*$B$5 =SUM(C20:E20)
Canteen Costs
=A12
=B12/$E$12*$B$6 =C12/$E$12*$B$6 =D12/$E$12*$B$6 =SUM(C21:E21)
=A13
=B13/$E$13*$B$7 =C13/$E$13*$B$7 =D13/$E$13*$B$7 =SUM(C22:E22)
Depreciation of
Machinery
Dept Totals
=SUM(C19:C22)
=SUM(D19:D22)
=SUM(E19:E22)
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
39
SOLUTIONS TO TASKS
19.
A
1
B
C
D
E
F
Canterbury
Catering Ltd
2
3
Overheads
£
4
Rent
37,000
5
Insurance (Building) 22,000
6
Insurance
7
(Machinery)
25,000
Supervision
38,000
8
9
Overhead
Apportionment
10
Team 1
Team 2
Team 3
Total
11
Area (sq m)
5,500
6,450
7,000
18,950
12
No. of Employees
10
12
14
36
13
Value of Machinery
25,000
32,000
43,550
100,550
14
Value of Buildings
74,000
45,000
64,500
183,500
15
16
Overhead Analysis
Statement
17
Overheads
Basis
18
19
Rent
20
Insurance (Building) Value of Buildings
21
Insurance
(Machinery)
Value of Machinery
22
Supervision
No of Employees
23
Dept Totals
40
Area (sq m)
Team 1
Team 2
Team 3
Total
£
£
£
£
10,739
12,594
13,668
37,000
8,872
5,395
7,733
22,000
6,216
7,956
10,828
25,000
10,556
12,667
14,778
38,000
36,382
38,612
47,006
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
Canterbury
Catering Ltd
Overheads
£
Rent
37,000
Insurance (Building) 22,000
Insurance
(Machinery)
25,000
Supervision
38,000
Overhead
Apportionment
Team 1
Team 2
Team 3
Total
Area (sq m)
5,500
6,450
7,000
=SUM(B11:D11)
No. of Employees
10
12
14
=SUM(B12:D12)
Value of Machinery
25,000
32,000
43,550
=SUM(B13:D13)
Value of Buildings
74,000
45,000
64,500
=SUM(B14:D14)
Overhead Analysis
Statement
Overheads
Team 1
Team 2
Team 3
Total
£
£
£
£
=A11
=B11/$E$11*$B$4
=C11/$E$11*$B$4 =D11/$E$11*$B$4
=SUM(C19:E19)
Insurance (Building) =A14
=B14/$E$14*$B$5
=C14/$E$14*$B$5 =D14/$E$14*$B$5
=SUM(C20:E20)
Rent
Basis
Insurance
(Machinery)
=A13
=B13/$E$13*$B$6
=C13/$E$13*$B$6 =D13/$E$13*$B$6
=SUM(C21:E21)
Supervision
=A12
=B12/$E$12*$B$7
=C12/$E$12*$B$7 =D12/$E$12*$B$7
=SUM(C22:E22)
=SUM(C19:C22)
=SUM(D19:D22)
Dept Totals
=SUM(E19:E22)
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
41
SOLUTIONS TO TASKS
20.
A
1
B
C
D
E
F
Chestnut
Fencing Ltd
2
3
Overheads
£
4
Rent and Rates
55,000
5
Insurance (Building) 47,000
6
Machinery
7
Depreciation
32,000
Supervision
54,000
8
9
Overhead
Apportionment
10
Team 1
Team 2
Team 3
Total
11
Area (sq m)
2,300
1,500
2,450
6,250
12
No. of Employees
15
10
20
45
13
Value of Machinery
1,400
16,000
2,400
19,800
14
Value of Buildings
1,500
1,430
4,320
7,250
15
16
Overhead Analysis
Statement
17
Overheads
Basis
18
19
Rent
Area (sq m)
20
Insurance (Building) Value of Buildings
21
Insurance
(Machinery)
Value of Machinery
22
Supervision
No of Employees
23
Dept Totals
42
Team 1
Team 2
Team 3
Total
£
£
£
£
20,240
13,200
21,560
55,000
9,724
9,270
28,006
47,000
2,263
25,859
3,879
32,000
18,000
12,000
24,000
54,000
50,227
60,329
77,444
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
Supervision
54,000
Overhead
Apportionment
Team 1
Team 2
Team 3
Total
Area (sq m)
2,300
1,500
2,450
=SUM(B11:D11)
No. of Employees
15
10
20
=SUM(B12:D12)
Value of Machinery
1,400
16,000
2,400
=SUM(B13:D13)
Value of Buildings
1,500
1,430
4,320
=SUM(B14:D14)
Basis
Team 1
Team 2
Team 3
£
£
£
£
=A11
=B11/$E$11*$B$4
=C11/$E$11*$B$4
=D11/$E$11*$B$4
=SUM(C19:E19)
Insurance (Building) =A14
=B14/$E$14*$B$5
=C14/$E$14*$B$5
=D14/$E$14*$B$5
=SUM(C20:E20)
=D13/$E$13*$B$6
=SUM(C21:E21)
=SUM(C22:E22)
Overhead Analysis
Statement
Overheads
Rent
Total
Insurance
(Machinery)
=A13
=B13/$E$13*$B$6
=C13/$E$13*$B$6
Supervision
=A12
=B12/$E$12*$B$7
=C12/$E$12*$B$7
=D12/$E$12*$B$7
=SUM(C19:C22)
=SUM(D19:D22)
=SUM(E19:E22)
Dept Totals
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
43
SOLUTIONS TO TASKS
21.
A
1
B
C
D
E
F
Raw Materials
Baking
Finishing
Total
Bart’s Bakery
2
3
Overheads
£
4
Rent and Rates
24,500
5
Heat and Light
145,000
6
Machinery Insurance
28,000
7
Canteen Costs
14,000
8
9
Overhead
Apportionment
10
11
Area (sq m)
34,000
45,670
14,350
94,020
12
No. of Employees
25
15
18
58
13
Value of Machinery
£25,000
£32,500
£12,500
£70,000
14
Value of Buildings
£32,400
£21,450
£13,245
£67,095
15
16
Overhead Analysis
Statement
17
Overheads
Basis
18
Raw Materials
Baking
Finishing
Total
£
£
£
£
19
Rent and Rates
Area (sq m)
8,860
11,901
3,739
24,500
20
Heat and Light
Area (sq m)
8,860
11,901
3,739
24,500
21
Machinery Insurance Value of Machinery
10,000
13,000
5,000
28,000
22
Canteen Costs
14,000
23
Dept Totals
44
No. of Employees
6,034
3,621
4,345
33,754
40,422
16,824
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
Bart’s Bakery
Overheads
£
Rent and Rates
24,500
Heat and Light
145,000
Machinery Insurance 28,000
Canteen Costs
14,000
Overhead
Apportionment
Raw
Materials Baking
Finishing
Total
Area (sq m)
34,000
45,670
14,350
=SUM(B11:D11)
No. of Employees
25
15
18
=SUM(B12:D12)
Value of Machinery
25,000
32,500
12,500
=SUM(B13:D13)
Value of Buildings
32,400
21,450
13,245
=SUM(B14:D14)
Basis
Raw Materials
Baking
Finishing
Overhead Analysis
Statement
Overheads
Total
£
£
£
£
Rent and Rates
=A11
=B11/$E$11*$B$4
=C11/$E$11*$B$4
=D11/$E$11*$B$4
=SUM(C19:E19)
Heat and Light
=A11
=B11/$E$11*$B$4
=C11/$E$11*$B$4
=D11/$E$11*$B$4
=SUM(C20:E20)
Machinery Insurance =A13
=B13/$E$13*$B$6
=C13/$E$13*$B$6
=D13/$E$13*$B$6
=SUM(C21:E21)
Canteen Costs
=B12/$E$12*$B$7
=C12/$E$12*$B$7
=D12/$E$12*$B$7
=SUM(C22:E22)
=SUM(C19:C22)
=SUM(D19:D22)
=SUM(E19:E22)
Dept Totals
=A12
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
45
SOLUTIONS TO TASKS
22.
MEMORANDUM
To: Managing Director
From: Finance Manager
Date: Insert Today’s Date
Subject: Budgeted Overheads
Please find detailed below the total budgeted overheads for next year as
requested in your memo.
Overheads
£
Rent and Rates
25,000
Building Insurance
12,000
Canteen Costs
10,000
Depreciation of Machinery
46
8,000
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
23.
MEMORANDUM
To: Board of Directors
From: Finance Manager
Date: Insert Today’s Date
Subject: Budgeted Overheads
Please find detailed below the total budgeted overheads for next year as
requested in your memo.
Overheads
£
Rent
37,000
Insurance (Building)
22,000
Insurance (Machinery)
25,000
Supervision
38,000
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
47
SOLUTIONS TO TASKS
24.
MEMORANDUM
To: General Manager
From: Finance Manager
Date: Insert Today’s Date
Subject: Budgeted Overheads
Please find illustrated below the total budgeted overheads for next year.
Total Budgeted Overheads
60000
50000
40000
30000
£
20000
10000
0
Rent and Rates
48
Insurance
(Building)
Machinery
Depreciation
Supervision
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
SOLUTIONS TO TASKS
25.
MEMORANDUM
To: Managing Director
From: Finance Manager
Date: Insert Today’s Date
Subject: Budgeted Overheads
Please find illustrated below the total budgeted overheads for next year.
13%
7%
12%
Rent and Rates
Heat and Light
Machinery Insurance
Canteen Costs
68%
USING INFORMATION TECHNOLOGY IN ACCOUNTING (INT 2)
49