Accounting Information Systems Importance

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This assignment delves into the crucial role of accounting information systems (AIS) in contemporary businesses. It examines how AIS influence organizational operations, financial reporting, and strategic decision-making processes. The analysis considers factors such as AIS adoption, implementation challenges, and the impact on firm performance. Furthermore, the assignment explores various aspects of AIS, including data processing, security, and integration with other business systems. It highlights the evolving nature of AIS and their significance in shaping the future of accounting practices.
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ACCOUNTING INFORMATION SYSTEMS
Accounting Information Systems
ENE3296 – Gayanka Goonatillake
PFEC3327 – Lakran Fernando
STRC3019 – Pasan Gajadeep
PRT3138 – Chamith Perera
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2ACCOUNTING INFORMATION SYSTEMS
Executive Summary
The main purpose of the assignment is to explain the concept of Enterprise Resource Planning.
The case study on B Bakery firm explains their operational functions that they currently follow.
The study explains that B bakery firm still uses manual accounting system for recording their
financial transactions. For this, the bakery firm now needs an accounting system or software that
can help them in getting accurate results in minimum time period. The studies evaluate main
accounting software such as MYOB, SAP and XERO with its advantages and benefits for
different types of software. The study even recommends B Bakery to use the best accounting
software package that meet their present requirements and expectations of the company.
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3ACCOUNTING INFORMATION SYSTEMS
Table of Contents
Introduction......................................................................................................................................5
Question 1........................................................................................................................................6
Defining Business Processes...........................................................................................................6
Part A...............................................................................................................................................6
Who is a baker and what are the activities performed by B Bakery currently................................6
Question 2......................................................................................................................................12
Developing business requirements................................................................................................12
Part B.............................................................................................................................................12
Process that is crucial to be performed..........................................................................................12
Part C.............................................................................................................................................14
Suitable outcomes of the business process....................................................................................14
Question 3......................................................................................................................................16
Determining the systems requirements..........................................................................................16
Part A.............................................................................................................................................16
Question 4......................................................................................................................................17
Software selection..........................................................................................................................17
Part A.............................................................................................................................................17
SAP................................................................................................................................................17
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4ACCOUNTING INFORMATION SYSTEMS
MYOB Software............................................................................................................................19
XERO............................................................................................................................................21
Part B.............................................................................................................................................23
Adequate accounting software selection for B Bakery..................................................................23
Question 5......................................................................................................................................24
Vendor Selection...........................................................................................................................24
Part A.............................................................................................................................................24
Part C.............................................................................................................................................25
Explanation of selecting best appropriate vendor (accounting software vendor) for B Bakery....25
Conclusion.....................................................................................................................................26
Reference List................................................................................................................................27
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Introduction
The current study explains the concept of Enterprise Resource Planning. Here, Enterprise
Resource Planning means the flow of business activities where companies make effort to
improve different problems that they face currently (Worrell, Wasko and Johnston 2013). The
problem can be related to purchasing, inventory, finance and marketing of any business
enterprise. ERP software is one of the famous accounting software that helps company when
they implement the software in their operations. This accounting software helps in maintaining
and sharing of information in and within the company. The accounting software enables database
sharing among various units in company. For instance- Employees specialized in various field
remain content while communicating with other employee in the same grounds for exchange of
information (Wijaya et al. 2015). Using Enterprise Resource Planning help companies to get
access to accurate information at the time of final decision-making process
Nowadays, Enterprise Resource Planning had extended their scope as they have reached
Business Intelligence (Turner and Weickgenannt 2016). It mainly include concept of E-
commerce and market automation. In addition, Cloud computing is other concept that help
companies to increase growth and enhancement of business opportunities. Enterprise Resource
Planning help in improving financial related problems in compliance with regulatory standards
and leading to risk avoidance
From the case study, it is understood that B Bakery is a family-owned business that has
70 employees. The firm earns revenue at $13.5 million for particular year. This firm offer bread
and confectionary products that engage in business process. B Bakery analyzes business growth
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6ACCOUNTING INFORMATION SYSTEMS
for past five years. B Bakery lost some of the key account and was facing difficulty to compete
with their competitors (Worrell, Wasko and Johnston 2013). The firm currently uses manual
accounting system for recording their financial transactions that is time consuming and not
accurate all the time. To that, the firm felt the importance to invest money for implementing
computerized accounting software.
Question 1
Defining Business Processes
Part A
Who is a baker and what are the activities performed by B Bakery currently
Baker is a person who bakes breads and other confectionary items and sells it to the
customers (Trigo, Belfo and Estébanez 2016). In addition, B Bakery is a well-known baker shop
that is owned by family and they planned for expansion by using accounting software. Using
accounting software will help B Bakery at the time of recording financial transactions in the near
future. The firm has 70 employees who are working together and currently uses manual
accounting system. The firm is not a big one but decide to expand their operations so that they
earn profits by implementing accounting software (Worrell, Wasko and Johnston 2013).
It is important for every business organization to keep a record of financial transactions
on daily basis. Below is the process mentioned that should be used by business enterprise in
order to get access to accurate data (Sutton and Arnold 2013).
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Step 1- Creation of customer account
Step 2- Creation of Vendor account
Step 3- Creation of bank account
Step 4- Chart of accounts prepared for proper enhancement
Step 5- Cash or cheque received from customers
Step 6- Payments need to be done either by cash or cheque
Step 7- Journal entry preparation
“Sales and Marketing Department”
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8
Sales and Marketing Department Process
Creation of Sales Order
Sales orders picks up as well as packed in nice way
Shipping Orders
Creation of Sales Invoice
Return of items for any detection of defects
ACCOUNTING INFORMATION SYSTEMS
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Purchase Department Process
Order of Purchase
Time assigned for orders for picking up from warehouses
Invoice Purchase
Purchase Returns
ACCOUNTING INFORMATION SYSTEMS
Figure: Sales and Marketing Department Process
(Source: Sousa and Oz 2014)
“Purchase Department Process”
Figure: Purchase Department Process
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Inventory Management Process
Creation of Stock items
Stock issued for future reference
Stocks needs adjustments on physically ways
ACCOUNTING INFORMATION SYSTEMS
(Source: Simkin, Norman and Rose 2014)
“Inventory management process”
Figure: Inventory Management Process
(Source: Rainer et al. 2013)
“Manufacturing Department Process”
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Manufacturing Department process
Creation of material bill
Creation of work orders
Creation of work orders in recording of WIP receipts
ACCOUNTING INFORMATION SYSTEMS
Figure: Manufacturing Department process
(Source: Prasad and Green 2015)
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Question 2
Developing business requirements
Part B
Process that is crucial to be performed
B Bakery is a family owned trade who decides to install new accounting software so that
they can record all financial transactions (Worrell, Wasko and Johnston 2013). There are some
processes that need to be followed by business enterprise to get access to performance based
objectives. Business enterprise should set specific objectives and carry out the business
according to that so that there is smooth functioning of operations in the upcoming years. The
bakery firm should invest money in new accounting software as it will directly link to get
increased profits or revenue in the business. The new accounting software that will be
implemented by the bakery firm will guide and instruct ways for performing business in next
level. Use of SAP accounting software will help in achieving excellence in finance management
and accounting activities at the bakery firm. The bakery firm needs to decide upon which
accounting software to be used so that they can achieve further profits, set objectives and
excellence. This bakery firm decides to expand their operations by implementing accounting
software for recording financial transactions. Use of accounting software will help business
enterprise to achieve volatile in operations. This accounting software will solve complex
problems and guide managers at the time of decision-making process. Accounting software help
in learning innovative technology solutions and enables deliver of higher values for smooth
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functioning of business enterprise. The bakery firm can manage large volumes of data after
implementing accounting software (Peppard and Ward 2016).
B Bakery is a medium-sized enterprise that has high turnover while they undertake
regular business activities. In addition, the bakery firm faces various difficulty as they still uses
manual accounting system for keeping a track of all financial transactions. In order to overcome
the difficulty, B Bakery had decided to implement accounting software in their operations so that
they get access of information with high accuracy and within short span of time (Pearlson,
Saunders and Galletta 2016).
The bakery firm should find innovative ways so that they can minimize their operating costs and
are capable to sustain in the future financial years. After adopting automated accounting system,
all the above issues can be solved at B Bakery in smoother terms (Parkinson, Riro and Waweru
2015).
If B bakery still continues to use manual accounting system, they will not be able to follow the
production cost in systematic way and fails to compete with their competitors who are dealing in
the same sector (Khairi and Baridwan 2015).
Annual reports and financial statements documentation- From the case study of B Bakery, it
is noted that the bakery firm should prepare financial statement and annual reports of their firm
by using automated accounting system rather than manual accounting system (Kearns 2014). It is
recommended to B Bakery in paying off their liabilities on timely basis (Kanellou and Spathis
2013).
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14ACCOUNTING INFORMATION SYSTEMS
Outcomes that is required from these processes to achieve business objectives
There are different outcomes that need to be carried out after implementing accounting
software. In addition, the new accounting software provides detailed information that helps at the
time of decision-making process (Worrell, Wasko and Johnston 2013). Furthermore, using new
accounting software will help B Bakery for expansion and revenue generation in the near future.
Part C
Suitable outcomes of the business process
The business process adopted by B Bakery is mentioned above with proper justification
as to what they use currently to keep a track of financial data in their business. In order to
mitigate the issues that are currently faced by B Bakery, it is necessary for them to adopt
automated accounting software for carrying out the business in the most appropriate way (Ismail
and King 2014).
It is important for B Bakery to have proper information about highest as well as lowest
production unit where variable units can be properly controlled. It is important for the bakery
firm to get access to appropriate manufacturing systems as well as minimize the production units
as it incur higher amount of operating costs (Guragai et al. 2015).
Appropriate preparation of financial statements- B Bakery should adopt automated
accounting software as it will help them to publish accurate as well as error-free financial
systems (Worrell, Wasko and Johnston 2013). In order to publish financial statements, B Bakery
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should get access to analyze the performance of their firm within a specific time frame and
planning for business operations.
Increase in sales- It is important for B Bakery to get information about best pricing strategy that
will help the firm in the short-term and long-term (Guffey and Harp 2013).
Question 3
Determining the systems requirements
Part A
There are different requirements that business enterprise should take into account at the
time of installing accounting software.
1. “Windows XP (SP 3) as well as Windows (SP 2) and Windows 7”
2. “35 MB disk space in the company file”
3. “2000 to 2007 version in Microsoft Office”
4. “1GHZ Pentium Intel Processor with 1 GB RAM or can be higher”
5. “Minimum v7 in Apple QuickTime”
6. “200 MB for program installation for free hard disk”
Before selecting any of the accounting software, business enterprise should maintain
above requirement. B Bakery is one of the growing firms that engage in evaluating among
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different types of accounting software in their business operational activities (Worrell, Wasko
and Johnston 2013).
The bakery firm should get access to the internal system of business enterprise in the most
appropriate way (Worrell, Wasko and Johnston 2013).
Question 4
Software selection
Part A
SAP
SAP accounting software help business enterprise in providing solutions in case of any
damaged effects to solve complex issue. This accounting software enables growth opportunities
and innovation to compete with other company. SAP accounting software help in achieving
excellence for any company in the field of financial management and accounting. Therefore,
SAP accounting software easily manages stock to attain future goals and objectives (Worrell,
Wasko and Johnston 2013).
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Financial planning and analysis- By using SAP accounting software, business
enterprise can easily engage in efficient financial planning and analysis. This accounting
software will guide ways that can easily reduce control costs at sustainable margins and
help at the time of undertaking strategic decisions (Dillard, Yuthas and Baudot 2016).
To that, the concept enables treasury management and enhancement of compliance
programs.
Treasury and financial risk management- This concept of treasury and financial risk
management help in controlling ways to manage cash and decision related financial
activities (Worrell, Wasko and Johnston 2013).
Collaborative finance operations- This concept of collaborative finance operations help
in improving automation process that lead to deliver proper adequate services.
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Enterprise risk and compliance management- This concept of enterprise risk and
compliance management help in measuring fraudulent practices and processing the audit
practices in definite way (Dillard, Yuthas and Baudot 2016).
Benefits of SAP
SAP accounting software provides instant work within specified time that helps in
undertaking personalized decision-making activities (Diatmika, Irianto. and Baridwan
2016).
By using SAP accounting software, customers and suppliers will get benefited from
efficient operations for smooth functioning of business enterprise
By using SAP accounting software, financial risks can be well-managed and help in
decision-making process to reduce further risk faced by any business enterprise (Worrell,
Wasko and Johnston 2013).
MYOB Software
MYOB accounting software help in managing finances for boosting profitability as well
as taking better decisions with real time view of the finances (MYOB Accounting System. 2017).
This accounting software saves time to increase level of productivity. Using this accounting
software, companies can get access to updated information with the compliance obligations and
working together with online bookkeeping activities. MYOB accounting software was awarded
as the Most Innovative Large Company for creation of smart bills. The powerful feature of this
accounting software allows SME customers to save time for bookkeeping activities (Worrell,
Wasko and Johnston 2013).
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Core features of MYOB accounting software:
Works online
Managing quotes, invoices and statements
Calculating and tracking GST
Tracking and paying expenses
SuperStream Compliance
Selling items or services
Managing customers as well as suppliers
Payroll
Paying employees and tracking leave
Electronically report
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20ACCOUNTING INFORMATION SYSTEMS
Inventory
Managing items list
It is not important for a person to be an accountant for using MYOB online accounting
software. Using this accounting software, fast and easy tax updates are possible by paying super
and staying on top of ATO SuperStream requirements. MYOB Essentials help in managing cash
flow as well as ATO conformity requirements that include time saving features for taking care of
day-to-day bookwork (Worrell, Wasko and Johnston 2013).
XERO
This accounting software is useful for small business enterprise for tracking their
financial transaction in systematic way (Xero. 2017).. XERO is an accounting software that will
save time and help in business growth. They will have unlimited users as well as 24 by 7 support.
XERO accounting software has the best security and reliability of activities that should be
adopted by small business enterprise (Bodnar and Hopwood 2013).
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Benefits of XERO accounting software
XERO accounting software enhances work efficiency at the time of carrying out financial
transactions in the most accurate way (Xero. 2017)
XERO accounting software keep a proper check on revenue generation and smooth flow
of data as a way of high-intensive devices (Xero. 2017)
XERO accounting software increases the level of capacity and taking business to further
level for achieving maximum profits in the upcoming financial year (Xero. 2017)
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Part B
Selection of appropriate accounting software for B Bakery
The selection of accounting software can be proved to be a challenging decision for any
small and medium enterprise (as in case of B Bakery) company.
Low-end accounting software- Low-end accounting software is mostly used by doctors and
lawyers who only have to perform less business transactions. In case of organization, small scale
firms use low-end accounting software as they do not have adequate money to purchase medium-
end or high-end accounting software. Small-scale business enterprise lacks proper organization
structure and they do not have to record any complex financial transactions and that explain the
fact that these enterprise should use low-end accounting software (Belfo and Trigo 2013). Low-
end accounting software packages mostly offer more features as it was ever before but the
options that are available are confusing almost of the first time customer. Decision process can
be easier if there is appropriate setting of timeline, budget preparation as well as soliciting
employee input in an effective way. To that, technical support becomes easier especially in case
when the software is first installed or configured at the same time. The right selection will
depend upon the program that best serves the current needs of company while they are capable of
expansion activities (Trigo, Belfo and Estébanez 2016). SME companies such as B Bakery faces
lot of issues at the time of selecting effective accounting software that can best serve their needs
as well as expectations. This business should have proper information regarding right accounting
packages that best serves the current needs of the business and that can easily be adapted
depending upon the future needs. Above all, customer support is extremely important in case of
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outset when the right solution moves around or beyond just software (Worrell, Wasko and
Johnston 2013).
Medium-end accounting software- Companies who use medium-end accounting software can
easily meet primary requirements. This accounting software mainly aims at covering wide range
of business software that is actually capable of serving the needs of multiple accounting
standards as well as allowing accounting in multiple currencies. As far as general accounting
functions is concerned, the software takes into account integrated or add-on management
information systems that needs to be oriented towards one or more markets such as integrated or
add-on project accounting activities. Some of the popular software packages that are used in the
market have the following features that include industry standard robust databases, tools used for
configuring or extending the application for accessing single program code as well as industry-
standard reporting tools (Trigo, Belfo and Estébanez 2016).
High-end accounting software- High-end accounting software is used by companies who deal
with complex transactions and it include most complex and expensive business accounting
software that becomes an extensive part of suite of software known as Enterprise Resource
Planning Software. Some of the applications used by companies have primarily long
implementation period that can be more than 6 months of time span. Software coming under this
category simply is the set of functions that need significant integration as well as configuration
and customization for beginning activities to reassemble an accounting system as a whole. One
of the benefits of high-end solution is that the systems are mainly designed for supporting any of
the individual company that need high customization and tailored according to exact business
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24ACCOUNTING INFORMATION SYSTEMS
requirements. Therefore, the accounting software comes at a significant cost as far as money is
concerned as well as implementation time (Trigo, Belfo and Estébanez 2016).
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Question 5
Vendor Selection
Part A
Point of Difference SAP MYOB
Features
Multi-Lingual Powerful updates for current
accounting software
Multi-currencies Multi-user assessment
Help in fast decision-making
process
System flawless attributes
Efficient cash management Competent cash flow
management
Time period examination for
reduced sales cycle
Proficient payroll administration
Integrated functional departments Efficient inventory management
Benefits
Increased productivity Faster input
Significant cost savings Greater cost cutting
Consistent operations Makes GST filing easier
Flexibility Quick access to management
information
Continuous support Improved accuracy
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Part C
Explanation of selecting best appropriate vendor (accounting software vendor) for B
Bakery
From the above discussion regarding all the accounting software, it is suggested to B
Bakery for using MYOB accounting software. B Bakery needs accounting software that can
replace manual accounting system to computerized accounting software that will help in
recording financial transactions. This firm still uses manual accounting software for tracking
financial transaction that is time consuming and lack accuracy as well. This is a medium-sized
firm and need to use medium-end accounting software for tracking automated bank
reconciliation statements. To explain in detail, XERO accounting software help in managing
transactions in relation to accounts receivable. The other accounting software named as DacEasy
cannot be used by B Bakery.
Explanation had been given for all the accounting software such as SAP, MYOB and
XERO. After evaluating all the three accounting software, MYOB proved to be the best among
three that should be adopted by B Bakery. MYOB accounting software help in generating
accurate reports that is not possible in any of the above mentioned accounting software such as
SAP and XERO. There will be vast improvement at B bakery after they implement MYOB
accounting software as they will get access to accurate data, growth, and expansion and profit
generation in the upcoming financial years. MYOB accounting software is now released their
own cloud-based offerings especially for business owners named as MYOB Essentials as well as
MYOB AccountRight so that they give tough competition to XERO. Both MYOB Essentials as
well as MYOB AccountRight are cloud-based accounting platforms that feature web-based
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platforms so that it can be accessed from anywhere and everywhere (MYOB Accounting System.
2017). By the name, it is understood that MYOB Essentials aims at offering basic accounting
software that would be suitable especially for small and medium scale business like B Bakery.
Conclusion
The above analysis on different accounting software packages had been explained to
recommend B Bakery as to which is the best suited accounting software that meet basic
expectations and needs for tracking all financial information. B Bakery is a family-owned
business enterprise where the bakery firm uses manual accounting system for recording financial
transactions. The bakery firm should use medium-end accounting software as they need software
that best meet the interests of the shareholders. On comparing among three accounting software,
MYOB, XERO and SAP. MYOB remains the dominant leader especially in the Australian
market for getting access to cloud computing software whereas XERO takes the second position.
Still, for this study, it was found out that MYOB suits or meets the needs and expectations of B
bakery than any of the other accounting software packages. It is because of the reason that all the
mentioned accounting platforms should have the capacity to provide most of the small and
medium business with the essential accounting tools that are needed to run a business. In this
case, the question needs to ask by the business at the time of selecting an option on what does
accountant of B Bakery actually use or recommend. Hence, it was found out that B Bakery was
still using manual accounting system to record financial transactions. This means the accountant
at B bakery are not proficient enough to handle this accounting software. MYOB will be the best
accounting software as it is easy to use and operate. It is thereby required to understand simple
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fact that business remains stressful always with certain paperwork and data, so it will be
recommend making an effort for streamlining collaboration as and when needed.
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References and Bibliography
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Bodnar, G.H. and Hopwood, W.S., 2013. Accounting Information Systems: Pearson New
International Edition. Pearson Higher Ed.
Diatmika, I.W.B., Irianto, G. and Baridwan, Z., 2016. Determinants of Behavior Intention Of
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Guffey, D.M. and Harp, N.L., 2013. Ranking faculties, Ph. D. programs, individual scholars, and
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systems. John Wiley & Sons.
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Controls. John Wiley & Sons.
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