IFSM 300 I.S Final Exam

Final exam

Case#1

Kim Fuller:

What information will Ms. Fuller need to manage the business? Classify this information in two categories: accounting information and non-accounting information

Accounting Information Non-Accounting Information
Business revenues and process set out for expenditures She also needs reports on liabilities, assets and stock equity Also other accounting information would include the following:Used truckGrinding machinePersonnel computerWarehouses $162,000Sibling’s investment $ 90,000Mortage loan $112,000Filler’s saving $75,000 Similar to any business, she would need to be familiar with the competitive market she is inShe would also need to form relationships with people who are part of her operation and help her make everything possibleAlso hiring people who will make a good fit in her organization and have the necessary skill set  Also other non accounting information would include the following:Grind machine workersAccountant assistancesContracts with bottling companiesAccounting Software Package

2- See what you can do to draw up a beginning of business list of the assets and liabilities of Ms. Fuller’s company making any assumptions you consider useful. How should she go about putting a value on the company’s assets? Using your values, what is the company owner’s equity?

Assets Liabilities Equity for Stockholder
Equipement (including transportation, machinery) – $ 65,000Warehouse – $ 162,000Liquid Cash – $ 50,000 Mortgage Loan $112,000 Ms. Fuller – $75,000Siblings – $90,000
$ 277,000 $ 112,000 $ 165,000

Notes:

Cash = Fuller’s saving + Sibling investment –Equipment cost – warehouse deposit =

$75,000+ $90,000-$65,000-$50,000 = $50,000

Mortgage = Warehouse cost –warehouse deposit

= $162,000- $50,000 = $112,000

Paid in capital = Fuller’s saving + Sibling investment

= $75,000 + $90,000 = $165,000

Hence, the total stockholder equity would be $ 165,000.

3- Now that Ms. Fuller has started to make sales, what information is needed to determine “profit and loss”? What should be the general construction of a profit and loss analysis for Ms. Fuller’s business? How frequently should she do such an analysis?

4- What other kinds of changes in assets, liabilities and owner’s equity will need to be recorded and reported if Ms. Fuller is to keep control of the business?

To construct an effective profit and loss analysis to Ms. Fuller’s business we would have to take certain things in consideration. She would definitely take under consideration what her business’ revenues are, as well as what the costs are – including operating and administrative costs. From my understanding of her operation, it seems as though the expenses due to the production and distribution of the product. All of this would be done, given that the revenues are credited. Having said this, an effective profit and loss analysis needs to keep record of the liabilities part of her operation (including mortgage payment), the payments or dividends that she needs to make to her siblings in accordance to the investment they made to the company. She will also need to record the change in value of assets. Moreover, I believe she should do the profit and loss analysis every quarter. This way she can have an accurate representation of the statistics of her business, which will in turn help her grow the business and plan for the future.

CASE #2Managing the move to the Cloud-Analyzing – Risks of Cloud-Based Accounting

1-Pia should select system 3 because unlike the other two systems it has high level of efficient interface and it can integrate upon request. System 3 offers a big monthly price among the three systems but the good thing is there is no transaction fees which would suitable for Pia. As Pia would not be able to afford paying increased fees it would be a good fit for pia to select system 3 as her cloud-based accounting information system. Pia would not be able to afford paying increased service fees and accounting companies have multiple customers many of which are much larger and more interesting than her pharmacy. Pia is also getting 2 hours of accounting services in this monthly package.

2- No, as Pia is choosing system 3 as her cloud based AIS it would be very good for her business because this system is tied with accounting services and Pia would easily manage the services as accountant as well. This system is pretty old and trusted for many years and the best part it has zero transaction cost. As Pia would be the one who will use the system there is no chance of lock-ins if she hired an accountant as the system is automated there will no be huge problems or lock-ins in the future as well.

3-If pia selects system 3 and uses an accountant she would have much time to monitor what the accountant is doing .She should ensure all the accounting transaction raw data are stored in one single place and she could re-check it every day to make sure the accountant is doing the way she wants .If all the data are stored in house and there is no internet connection the data will be pretty safe. If she uses the internet often Pia can use a good antivirus in her transaction computer to make sure the data is safe and locked from outside theft. She also can install a CCTV camera to make sure all the data is recorded by the accountant without any interruptions

4- Yes price is an important factor when choosing the system because business growth has to effect on the efficiency of operations. If pia adopts the cloud based AIS that should think about is it cost efficient or not. On a business there must be concern about benefit and cost when choosing the system. There were fixed fees, software licenses and basic monthly service fees and some hidden costs. Over all, the fee should always fair and beneficial to the company. Along with price it is important that should also be user friendly. So, user can easily work with it. The company should think about decision which system should purchase which will be beneficial from other according to cost and efficiency (Stax Inc, October 2016).

5- Pia should manage payroll and payments and the accountant should manage sales, purchases and reporting. In the payroll section pia will do Personnel register maintenance, Basic payroll data maintenance, Payroll calculations. And in the payments, she should be able to manage Periodic VAT payments Salary payments, Payments for purchases, travel and other expenses, Monthly payroll tax payments which I assume she already does this activity by herself. Sharing the sales accounting responsibilities like:

Client register maintenance

Product register maintenance

Sending sales invoices

Handling of sales invoices

Sending note of complaint

Sales ledger maintenance

And Purchasing, Reporting responsibilities like:

Supplier register maintenance

Receiving purchase invoices

Handling purchase invoices

Handling purchase, travel & other costs

Purchases ledger maintenance

Preparation and sending of annual salary reports

Preparation and sending of annual pension insurance reports can be done by the professional accountant. Sales, purchasing and reporting should be done in house because this activity can complex when done using cloud computing if there is an error in software or there is an interruption in internet connection all the operation will be on hold so it’s better of using an offline system where all the data and all the input is done in-house. As an owner pia has already managing much of her business activities as an accountant so it’s a good idea if she manages the payroll and payments section and she can do that using the help of cloud computing Very easily.

6- When it is important to ensure a good fit between the selected system and the work arrangement. First of all, to define whether the system is effective or not we have to then relate to the work system with if the business as well as effect on the efficiency. Arrange the work step by step in the system. Before arrange the work in system concern about user oriented and must set of critical decision concerning the task because in accounting there have several tasks and sub tasks, adding complexity of the problem. Mainly, set the work with the system integrate them properly according to business (Bourgeois & David, Feb 2014).

7-

8- In long term Pia will observe the benefits of moving to the cloud accounting system, as she adopts it for getting more time where she will able to focus more on management and strategy development of her pharmacy. By implications of this cloud accounting system she will be free from accounting. As she wish to move cloud accounting system because she found herself more costly and getting more time to spend on management and strategy development, but if this system will not provides her enough benefit as she expected she can shift to another cloud accounting system or if she found moving to cloud accounting system will not be able to help her then she can abandon it. (““Why Cloud Accounting Is Good for Business.”)

  • Transaction fee is Euro 0.95/transaction ( charged for sales & purchases invoice and monthly salary payments).
  • Accounting services cost approximately Euro 65/hour.

Work Cited

Bourgeois, Dave, and David T. Bourgeois. “Chapter 8: Business Processes.” Go to the Cover Page of Information Systems for Business and Beyond, Published through the Open Textbook Challenge by the Saylor Academy, 28 Feb. 2014, bus206.pressbooks.com/chapter/chapter-9-info-systems-strategic-advantage/.

Stax Inc., and Stax Inc. “Customer Decision Making Criteria and the Importance of Price.” Medium, Stax Insights, 24 Oct. 2016, medium.com/stax-insights/consumer-decision-making-criteria-and-the-importance-of-price-1783d5589a8e.

“Why Cloud Accounting Is Good for Business.” Xero, www.xero.com/us/resources/small-business-guides/cloud-accounting/cloud-accounting-business/