Value chain link together of all primary activities (line)

Inbound Logistics: receive store and distribute input

1-Operation: transfer input to product

2-Outbound Logistics: delivery distribution to customer

3-Marketing and Sales: help customer to buy

4-Service: post sell support

and support activities (staff)

1- Infrastructure: (accounting -legal – HR)

2-Human Resources Management:

3-Technological Development: R&D – website development

*Journal entries show all the information about a transaction, date, the accounts debited and credited then posted to
the general ledger.

*The list of general ledger accounts used by an organization is called its chart of accounts

Master files store permanent information such as general ledger account numbers and history or customer account
numbers and historical data for each customer ‫ )يحتوى على االختصار‬date and source (

Transaction files are used to update master files, and they store detailed information about business activities

maintain the transaction files for a number of years. After the transaction details are no longer needed, though, the
transaction files can be deleted.

accounting information system, accounts in the general ledger chart of accounts are numbered using block codes. Block
codes are sequential codes that have specific blocks of numbers reserved for specific uses.

sequence codes are used to identify customer sales invoices created in the order entry module and may be used for new
customer accounts in the accounts receivable master file

identify the role of the accounting information system (AIS) in the value chain

AIS adds value to the organization by providing accurate and timely information so all of the value chain activities can be
performed efficiently and effectively.

accounting information system provide relevant and reliable information to decision makers, used internally and are not
outside of the organization.

For example:

• Just-in-time manufacturing and raw materials inventory management is made possible by an accounting information
system that provides up-to-date information about inventories of raw materials and their locations.

• Sales information can be used to optimize inventory levels at retail locations.

• A variance report showing a large unfavorable variance in a cost indicates that investigation and possibly corrective
action by management is needed.
Transaction cycles are grouped business processes for which the transactions are interrelated. They include:

• Revenue to cash cycle.

• Purchasing and expenditures cycle.

• Production cycle.

• Human resources and payroll cycle.

• Financing cycle.

• Fixed asset cycle (property, plant, and equipment).

• General ledger and reporting systems.

Revenue to Cash Cycle or sales

involves activities related to the sale of goods and services and the collection of customers. The cycle begins with a
customer order and ends with the collection of the cash

The accounting information system is used for

• Tracking sales of goods and services to customers.

• Recording the customer orders.

• Maintaining customer records.

• Billing for goods and services.

• Recording payments collected for goods and services provided.

• Forecasting sales and cash receipts using the outputs of the AIS.

Activities in and inputs to the revenue to cash cycle include:

• starts when a company receives order from a customer. For credit orders, the customer's credit is checked and
approved or disapproved by the credit manager.
 Inventory is checked to determine whether items ordered are in stock.
 Input is created to the AIS for the invoice and the packing slip
 Notice is sent to the warehouse to print the packing slip, pick the order, and prepare it for shipping. For a
service, the service is scheduled.
 The AIS also updates the inventory module so that items sold are deducted from on-hand inventory and their
costs charged to cost of goods sold.
• After the items are picked, shipping documents, such as the packing list and bill of lading, are prepared to be
sent with the items.
• the items are then packed and shipped to the customer.
• The accounts receivable module, inventory module, and general ledger are updated and reports are processed.
• invoice is sent to the customer, and the customer updated in accounts receivable
• AIS should include a means to invoice customers as products are shipped.
• The payment or cash received is recorded, and the customer account in accounts receivable is updated to reflect
the payment.

Outputs of the revenue to cash cycle include:

• Internal management reports such as sales reports and inventory reports.

• Customer aging reports, showing the total accounts receivable outstanding balance broken down

• Collection reports, showing specific accounts that need follow-up for overdue balances.

• Information from sales reports, receivables aging reports, and receipts reports is used as input to a cash receipt
forecast.

• Various outputs are used in preparing closing entries and producing external financial statements.

For example, the aging report and other information is used in estimating credit loss expense for the period.