group 8
“Let one who seeks wisdom ask from The Lord”
James 1;5
Name
Gerald Hanyani
Alois Jikirosi
Eastilia Zhande
Zanele Ncube
Natasha Dutiro
Vongai Mukotami
Vimbai Terayi
Tatenda Marume
Tatenda Gotosa
Caroline T Makura
Reg no.
C1111817 T
C1111830 H
C1111558 M
C1111735 E
C1111392 G
C1111507 G
C1111327 L
C1111343 D
C1111337 X
C1111814 Q
“It is difficult and tiresome to come
up with an accounting information
system ”.
Discuss how the use of cycles help in
making sense of accounting
applications, give examples and
flow charts of such cycles in your
organisation
[20 marks]

AIS is exasperating and
intricating to come up with
since it processes many
kinds of accounting
transactions and in so
doing generating a wide
variety of documents and
reports.

Given the complexity of
designing new systems,
system designers have
created a large number of
tools for modelling
accounting applications.
Chief among them are
process maps, decision
tables and transaction cycles.
1) Transaction cycles
These are cycles that group transactions
related to an organisation’s business
processes.
2) accounting applications e.g. pastel, quickbooks, sage
These are computer-based accounting
information systems that assist in the
collection, storage, transformation and
distribution of accounting information for
planning, decision making and control.
Transaction processing cycles are the
subsystems of the overall accounting
information system. Thus it is
important for us to understand that
the integration of these cycles or subsystems to achieve a common goal
make up an accounting application.
 To
deal efficiently with the
knowledge gap in accounting
applications the use of transaction
cycles have been introduced.
These are :
 revenue cycles
 expenditure
cycles
 conversion cycles
 financial cycles
 Human-Resource management
cycle
 Fixed asset management cycle
 Cash-disbursement cycle
Definition;
It is the cycle that includes
accounting transactions which
records the generation of
revenue from the outputs of
the conversion processes.
Sales Order
1
Credit / Customer
Service
2
REVENUE CYCLE
(SUBSYSTEM)
Cash Receipts/
Collections
6
Shipping
3
Billing/ Accounts
Receivable
4/5
In this cycle the accounting system
records four economic events, i.e.
1. The organisation receives a request
for goods or services and computer
based systems use an order entry
application system to record these
requests.
2. The organisation delivers the goods
and services. A shipping application
system records this event.
3. The organisation requests payment
for the goods or services and this is
processed by the billing system.
4. An organisation uses a cash receipt
application system to record the
fourth economic event, i.e. the receipt
of cash in payment from the customer
Role of the
revenue cycle
in making sense of
accounting applications
Tracking sales of goods and services to
the customer.
The revenue cycle seeks to trace the sales of
goods to customers for the purpose of monitoring
timely and efficient cash collection.
Filling customer orders
This requires an interface with the inventory
control function. The revenue cycle must allow for
certain exception transactions e.g. sales returns,
which involves increasing inventory and reducing
the amount owed the company by the customer.

Forecasting sales and cash
receipts
It is accomplished by its ability to
analyse sales orders, sales terms,
payment histories and other data.
For example, sales orders are a good
indicator of future revenues and the
terms of sale provide information
about likely dates of collection on
accounts.
Definition
It consist of those transactions
incurred to acquire materials and
overhead items for the conversion
process of the business.
2
purchasing
1
3
Purchase
requisition
receiving
/inspection
Expenditure cycle
(subsystem)
5
Cash
disbursement
4
Accounts
payable
1.
2.
3.
4.
This cycle processes transaction
representing the following economic
events;
Organisations request goods and
services
Organizations receive goods and
services
Recognition of an obligation to pay
for the goods and services
Use of cash disbursements to record
the payment for the goods and
services
Role of the
expenditure cycle
in making sense of
accounting applications
1) Tracking purchases of goods
and services from vendors.
This cycle tracks the amounts owed
by the company to and it seeks to pay
creditors at the optimal time.
2) Maintaining vendor records.
Keeps records of reputable vendors
who offer quality goods and services
at reasonable prices
 Forecasting
purchases and
cash out flows.
The addition of all outstanding
purchase requisitions, invoices,
and receiving reports provides an
estimate of future cash
requirements.
A
company’s conversion cycle
transforms or converts input
resources, such as raw
materials, labour and
overheads, into finished
products or services for sale.
Conversion Cycle in Relation to Other
Cycles
Marketing
System
Sales
Forecast
Revenue Cycle
Sales Orders
Purchase Requisitions
Conversion
Cycle
Expenditure
Cycle
Labor Usage
Work
In
Process
Finished
Goods
General Ledger
and Financial
Reporting System
Role of the
conversion cycle in
making sense of
accounting applications


Consists of those accounting transactions that
record the acquisition of capital from owners
and creditors, the use of that capital to acquire
productive assets and the reporting to owners
and creditors on how it is used.
This can be considered as the most vital and
crucial cycle since it is the one that initiates
business transactions of all forms. As a
subsystem it has inputs, processes and outputs.
 Convert
raw materials into
finished goods.
Manufacturing company buy raw
materials inventories, apply labour
and overhead to them and produce
an output different from the material
purchased i.e. finished goods.


Monitor and control manufacturing costs
Since the costs of goods sold is likely to be
the most largest expenses in an organisation,
the conversion cycle
monitor and control
these
manufacturing costs.
Provide input for budget
Costs are as a subsystem of conversion
provides important control information for
the budget process and varies with the size of
the company.

Track purchases and sales of
inventories.
The conversion cycle seeks to
trace the purchase of materials
from suppliers for the purpose of
meeting production schedules

The three accounting
applications that record the
events in the financial cycle are
the property, the journal entry
and the financial reporting
systems.
Source of
capital
Financial
reporting
system
Journal entry
system
Property
system
One of the most challenging tasks in your
professional career is selecting an accounting
software package that matches the needs of
the organisation.
It should not contain more features than you
need which adds to the cost and make it more
complex and difficult to use.
It should contain features that streamline the
operation of your business.
And it should be easy enough to customize to
suit the unique objectives of the transaction
cycles