INPUT METHODS USED IN BUSINESS PROCESSES (STUDY OBJECTIVE 6)
As the steps in a business process occur, accounting data are generated that must be captured and recorded in the accounting information system. Accounting data are the input of the accounting information system. For example, a sale generates much accounting data that must be collected and recorded, such as customer identification information, identifying information for items and quantities sold, and information on discounts offered and taken. Most of the business processes in an organization generate accounting data. Because those processes—and the organizations themselves—can differ greatly, there are many different methods to capture and record accounting data, which is the purpose of an input method. Some of the input methods used in organizations today are described in this section, including source documents and keying, bar coding, point of sale systems, EDI, and e-business.
SOURCE DOCUMENTS AND KEYING
Within business processes, the accounting data are often initially captured and recorded on a source document. Source documents are usually preprinted and sequentially prenumbered—preprinted to have an established format to capture data and prenumbered for control purposes to ensure that there are no duplicate or missing source documents and that all source documents are accounted for. One example of capturing data on a source document is the use of an employee time card. As an employee begins and ends a workday, he or she records start and end times on the time card. At the end of the pay period, this source document is forwarded to the payroll department to generate a paycheck. In a computerized system, the start and end work times are keyed into the software, meaning that the payroll employee uses a keyboard to input the data. Exhibit 2-5 shows the input screen in Microsoft Dynamics GP® for entering employee hours worked. To key in hours worked, the person keying the data would need to enter the information from the source document—the employee time card.
This is only a single example of source document and keying. While many organizational business processes use this type of input method, it is time-consuming and error-prone due to the human efforts required to write on the source documents and to manually key in the data. Information technology has enabled input methods that reduce the time, cost, and errors of data input. The specific type of IT used to enable the input of data varies depending on the type of organization and the type of business process. Bar codes, POS systems, EDI, and e-business systems are technology systems that enable the input of data.
Exhibit 2-5 Keying Hours Worked in Microsoft Dynamics Software
As discussed in the previous section, much of this accounting software is moving toward a cloud computing based model. For example, Microsoft sells accounting software called Dynamics ERP. It can be purchased as a piece of software to be installed and run on the purchasing company's servers and the data is also stored on the company's data servers. Alternatively, Microsoft also offers Dynamics ERP as a cloud service. The software and data reside on Microsoft servers, and the software is accessed by the purchasing company via the Web, using a Web browser.
BAR CODES
A bar code is a printed code consisting of a series of vertical, machine-readable, rectangular bars and spaces that vary in width and are arranged in a specific way to represent letters, numbers, and other human-readable symbols. Bar codes are “read” and decoded by bar code scanners. Bar codes are used to identify retail sales products, identification cards, and other items. They also manage work in progress, track documents, and facilitate many other automated identification applications. To track work in process and inventory movement, a bar code tag (a small white label printed with a bar code) is placed on each inventory part and work in progress.
When inventory parts are counted or moved, a bar code scanner reads the bar code to input the necessary identification of that part. That is, the method of inputting data is not a manual keying of data, but a machine reading data by the bar code scanner. Another example of the use of bar codes to input accounting data is employee ID badges. When an organization uses a bar code system on employee IDs, the bar code reader can record the start and ending work times as the employee enters and leaves the workplace. The bar code scanner becomes the method of capturing and recording hours worked, eliminating the manual steps of writing the data on a source document and then later keying the data into software. Eliminating these manual processes reduces the time, cost, and errors of inputting data.
The most well-known use of bar codes, the point of sale system, is in retail sales.
POINT OF SALE SYSTEMS
A point of sale system (POS) is a method of using hardware and software that captures retail sales transactions by standard bar coding. The bar code label on the products is usually called the universal product code, or UPC. Nearly all large retail stores use POS systems integrated into the cash register. As a customer checks out through the cash register, the bar codes are scanned on the items purchased, prices are determined by accessing inventory and price list data, sales revenue is recorded, and inventory values are updated. Thus, the POS hardware and software automatically inputs the data when the bar code is read as the product passes over the scanner. As discussed in Chapter 1 regarding the IT enablement of data input, a POS system reduces the time, cost, and errors inherent in the manual input of data.
Retail food service companies such as fast food and casual eatery chains also use point of sale systems; however, the food products are not bar-coded. The POS systems for retail food service use touch screens to input sales rather than bar codes.
ELECTRONIC DATA INTERCHANGE
Electronic data interchange (EDI) is the intercompany, computer-to-computer transfer of business documents in a standard business format. EDI transmits purchase orders, invoices, and payments electronically between trading partners. Since transmission is electronic, the paper source documents and the manual keying of those documents are eliminated. For example, if Company A plans to purchase from Company B via EDI, Company A transmits a purchase order electronically to Company B. Company B's computer system receives and processes the order electronically. The mailing of a paper purchase order and the keying of that order by Company B has been eliminated. Therefore, we can see that EDI is a method of electronically inputting data into the accounting system. As was true of the other IT enabled input methods, this reduces time, cost, and errors.
E-BUSINESS AND E-COMMERCE
Data are also electronically exchanged between trading partners in e-business and e-commerce. Recall from Chapter 1 that e-business relates to all forms of online electronic business transactions and processing, whereas e-commerce is a type of e-business that is specific to consumer online buying and selling. A major difference between EDI and e-business (including e-commerce) is that EDI uses dedicated networks, while e-business uses the Internet. As is true for EDI, when data are exchanged electronically between trading partners, much of the manual data input process is eliminated, thereby reducing time, cost, and error.