ACCY 202 1st Edition Lecture 1 Outline of Current Lecture I. Required course material1. Connect2. I>clicker3. Notes PackageII. Course InformationIII. Weekly ScheduleIV. Compass SiteV. Major changes this semesterVI. Look through section III for class tipsVII. Introduction to Week 1 materials: Purchase of Inventory1. Phase 12. Accounting Information System (AIS)VIII. Purchase and Disbursement Cycle1. Step 1: Request Goods & Services2. Step 2: Authorize Purchase3. Step 3: Purchase goods/services4. Step 4: Receive goods & services5. Step 5: Make Paymenti. First, Vendor invoice is received, verified and the purchase is recordedii. Second, payment is authorized; a check is prepared and mailed to the vendorCurrent LectureI. Required course material 1.Connect-Electronic course access code and text included-Homework due on connect2.I>clicker3.Notes PackageII. Course Information- See pages i and ii of Notes PackageIII. Weekly Schedule- See pages iv.-viii of Notes PackageThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.IV. Compass Site- Weekly dashboard- Solutions will be posted, video links and screen shots- Course Policy document- TA office hour informationV. Major changes this semester- All old exams will be online- 3 exams now instead of 4- No comprehensive group project- Points have been shifted to Connect- Points have been shifted to TA homeworkVI. Look through section III for class tips- One student was able to get an A in the class even though he failed the first examwhen he changed his method of studying- Old exams are crucial- Goal: weekly mastery, discover what you don’t know ASAP, study early, get 100% of the cushion points VII. Introduction to Week 1 Materials1. Monthly Entries for purchase of inventory- Typically these are external transactions which is an exchange between the business and an outside party 2. Accounting Information System (AIS) is a set of interrelated activities, documents and technologies designed to collect data, process it, and report information to a diversegroup of internal and external decision makers in organizations- It also facilitates external investment and therefore the allocation of scare resources amongst investment alternatives- Input: Raw transaction details (Source Document)  Process Information  Output: Summarized Financial Information- High quality accounting information - Basically people are happy when accounting information is correct and timely!- An example of low quality accounting information is someone using letters of recommendation that all came from their mother.- Accounting is a formal system of activities within each business organization that identifies, measures, and converts detailed information about the company’s economic activities into a summary report for internal and external decision makers.- Source Documents are the original documents that are created when the transaction is first executed. VIII. Purchase and Disbursement transaction cycle1. Step 1: Request Goods & Services- Requests should be based on a documented or “monitored need”- For example, an employee on the front lines will notice that the company is running out of a certain stock- Some companies have a self-sufficient system that electronically monitors inventory levels and generates purchase requests2. Step 2: Authorize Purchase- All requests must be formally authorized before a “departmental purchase requisition”- Copies go to the following: the requisition department, Centralized purchasing (notification to start the purchase process), and accounting department3. Step 3: Purchase goods/services- Purchasing selects an approved vendor- The P.O. (purchasing order) is the only source document send to an outside partyand it is the only document which represents a legally binding contract- P.O. copies go to the following: purchasing, the vendor, the receiving party to do a “blind count”, accounting department, and the original department- “blind count” means that the receiving party does not know the quantity of items being sent to them, so they have to count it themselves. The quantity is blacked out on the order sent to receiving. It is supposed to add up to the amount that was sent, if not there was a problem in the process of sending the items.- Centralized Purchasing: An efficient and effective system that filters all company orders through one location. This minimizes the risk of unnecessary, low quality/fraudulent orders being placed and/or inconsistencies between various departments4. Step 4: Receive goods & services- The department maintains a log of all deliveries, performs a careful count and inspection of the goods received and prepare a “receiving report” documenting the actual quantity of goods received.- Quantity is blocked out so that a “blind count” happens. This avoids the procedures of background checks, security cameras and bonding- A copy of the receiving report is sent to accounting where it’s filed with other related documents known as a “voucher package”5. Step 5: Make Paymentiii. First, Vendor invoice is received, verified and the purchase is recorded- Entry Date – the date that accounting records reflect the entry- Calendar Date – the date the employee is physically making the entry- Transaction analysis makes sure: purchase was authorized, goods were physicallyordered with quality and accuracy, and the invoice is accurateiv. Second, payment is authorized; a check is prepared and mailed to the vendor- Check requests and supporting documents are given to a higher level employee to sign it- Unused checks should be kept in a locked cabinet and numerical sequence should be periodically verified- Segregation of Duties (SOD): (i) Authorization of transaction (ii) Custody of asset (iii) Record