Exhibit 1.1. Business Processes at ELERBE, Inc.
Production :
ELERBE (Electronic Resources for Business Education), Inc. develops electronic
textooks and educational software. Instructors develop these products with the support
of ELERBE’s editors and technical staff. When faculty members have an idea for a
product, they contact the acquisitions editior. The acquisitons editor performs an
intital review of the proposal. She then forwards the proposal to the developmental
editor. Once the product is approved, a cotnract is sent to the author. The contract
specifies details such as the author name, date of contract, royalty rate, title,
description, and the schedule for compelting the product
Authors work with a graphic designer and developmetnal editor to develop a product
design. Authors send compelted chapters/modules of the product to the publisher who
sends the materials to external reviewers. After the authors receive feedback form the
reviewers, they revise the product as necessary. Finally, the Quality Control
Departement performs detailed testing of the product. Once the product is ready, it is
send to the Production Departement which copies the electornic book to a CD-ROM
and then packages the product
Sales :
Currently, the company is selling its products only through bookstores. Once a
product is ready the Marketing Departement develops brochures. Sales represntatives
are then trained to demonstrate and explain the purpose and use of the product to
faculty across the country. Since faculty select textbooks and supplements for their
courses, such marketing efforts are crucial to product success. Once a text
book/supplement is adopted, the instructor informs the campus bookstore of the
decision. Bookstores order the products form ELERBE, Inc.
For CD-ROM products, ELERBE ships packages with the CDROM and user manuals
to the bookstores. For Internet based products, ELERBE ships a small package
containing an access certificate and a user guide. To access the electronic books,
students must use the username and password information on the access certificates.
Either way, students must go to the bookstore and make a purchase to have access to
an ELERBE product.
Exibit 1.2 Using Accounting Information at ELERBE, Inc.
ELERBE’s employees use its accounting information system in the following ways:
Perpare external reports :

Te controller needs an accounting system to prepare financial statements
required by investors and lenders and income and payroll tax returns required
by state and federal agencies.
Handle routine transactions:



Recording orders, shipments, and collections from customers. A system is
needed that supports these activities effectively and effeciently
Paying royalties to authors according to the sales of their books. Management
needs a system to record sales data by product and to group product sales by
authors
Respond to customers inquiries. Customers often call about product
availability, status of orders, and payments. This information should be easily
accessible.
Help managers make nonroutine decisions:


An author has presented a proposal for a new product. The acquisitons editor
must decide whether or not to accept the proposal. The information system
will be used to consider past sales and production costs of similar products to
estimate profitability
ELERBE is considering selling some of its products directly over the Internet.
In addition to information in the marketing database, the company will want to
compare Internet development costs to current costs.
Help in planning and control :


Each year, a budget is set for production costs. The budget is based on
amounts spent in the most rect year and on forecasts of expected sales in the
ensuing year. The information system has the capability of storing and
projecting budget figures and preparing reports that compare budgeted
production costs to actual costs.
ELERBE wants to make sure that customer orders are recorded with the
correct customer number, product naumber, price and quantity. The company
wants a data entry system that makes it easy to look up and confirm customer
and product numbers and that automatically records the slling price (taken
from a price list) when an order is entered.
Exebit 1.4 Role of Accontants at ELERBE, Inc.
Accontants work for and with ELERBE in a variety of capacities:



Donna Albright, the accounts receivable clerk, uses an accounting information
system for billing customers
Jane Brown, the controller at ELERBE, uses the accounting information
system to manage cash flow. Based on reports provided by the information
system, she determines when to invest temporarily idle cash and when to
obtain short term loans by using the line of credit offered by the company’s
bank.
Accounting Services Inc. provides accounting and tax services for small and
medium sized companies. ELERBE, Inc. has hired the company to handle
most of its payroll functions. The company uses ELERBE’s information
system to obtain the needed data

Robert Silva, ceritified public accountant, audites the financial statements of
ELERBE, Inc. In this process, he evaluates the reliability of the accounting
information sytem used to prepare the financial statements.