main copy.docx
TRANSCRIPT
OCP on Accounting Information System of Pedrollo NK Ltd. 1
Chapter 1Introduction
OCP on Accounting Information System of Pedrollo NK Ltd. 2
1.1 Introduction
The OCP program is an essential part of Masters of Business Administration (MBA). As a
student of MBA, it is required to work in a selected institution to enhance ones practical
knowledge and experiences. For the requirement of my course I was assigned to work on
Pedrollo nk Ltd. In this situation I was assigned to prepare report on “A study on the
Accounting Information System on Pedrollo nk Ltd”
For any Masters of Business Administration (MBA) student only curriculum activities is not
enough for handling the real life business situation. OCP program is the perfect blend of
the theoretical and the practical life experience. Whole the report has described the
different terms that is related to the AIS and the detail scenario of the different private
organizational performances.
1.2 Objectives of the study
The main objective of the study is to explore the accounting information system of Pedrollo nk Ltd.
To discuss about AIS & its importance in modern business.
To explore AIS of Pedrollo nk Ltd.
To identify whether Pedrollo nk Ltd. follows standard Accounting Practices.
1.3 Methodology of the study
Methods followed to perform a job or conducting activities to complete a task is called
methodology. In conducting this study the following methodology was adopted in
collecting data & information, preparation of reports etc. The methodology of report is
given below:
Primary sources of data:
For preparing this report, data was collected from different primary sources. Different
questions asked to IT officer and Accounts’ officer to collect the required data. Those data
are collected through face to conversation and observation.
Secondary sources of data:
OCP on Accounting Information System of Pedrollo NK Ltd. 3
Secondary sources of data are of two kinds:
Internal: Internal Reports of various records of the company, Other published
documents and Website.
External: Books, Articles and Website.
1.4 Scope of the study
The study has been conducted into two steps. In the first step, the concept, use, principles
etc. of AIS on Pedrollo nk Ltd. have been studied. In the second part the opinion of the
internal users has been collected.
1.5 Limitation
Since the personnel were very busy on their personal activities, they could not
provide enough time to me to discus my subject broadly.
Lack of opportunity to visit IT & Accounts department more than one time.
The website of Pedrollo are not that much rich with data.
The main constrain of the study was in sufficiency of information, which was
required for the study. There are various information the employee can’t provide
due to security and other corporate obligations.
Due to time limitation many of the aspects could not be discussed in the present
report.
Some information that are skipped by the respondent.
I have some error while analyzing the data and preparing the report.
OCP on Accounting Information System of Pedrollo NK Ltd. 4
2.1 Background of Pedrollo
Chapter 2Company Overview
OCP on Accounting Information System of Pedrollo NK Ltd. 5
Since 1969, Pedrollo nk Ltd. is working as a renowned Trading House under proprietorship
business to carry on import business & promoting quality products with competitive prices
in the local market.
The company started its journey with electric water pump marketing since 1985. After
formally incorporated in October 1987 it became the sole agent of world known Italian
'PEDROLLO' water pumps. During the last 30 years, PEDROLLO has become the symbol of
quality and market leader for the electric water pumps in all sectors through 14 showrooms,
190 dealers, 344 retailers and 43 service centers which made it possible to sell more than
1000000 pumps. Recently the company has planned to introduce a state of art water
management system in Bangladesh.
The company head office is located in Chittagong with regional offices in Dhaka & Bogra
with distribution facilities around the country and showrooms are located in big cities
supported by 260 employees. Beside the PEDROLLO it has the sole agency ship of Taiwanese
brand 'HCP' and Italian brand 'Rovatti' elctric pumps. From our inception, we believe in
serving people with
Longer product life
Energy efficiency
Minimum maintenance & countrywide service centers
Widest range of products – these four unique features made our products BEST
among our competitors.
Our motto is to “select the RIGHT pump as per user’s requirement” so that our customers
get most of their return from the product. Selection of the right product helped us greatly to
gain the confidence of our customers.
Being an Agro based economy with large population, our specially designed Irrigation
pumps & household pumps has been serving greatly to the users even in low voltage too.
Household pumps were in 1985. After huge success of these series, we introduced the
Irrigation series & Submersible series in 1988 & in 1991 respectively which also became
market leader within 1 year.
OCP on Accounting Information System of Pedrollo NK Ltd. 6
With our dedicated & competent employees supported by state of the art technology made
it possible to serve our valued customers at minimum time. This made us the Best water
pump supplier company of Bangladesh with more than 1 MILLION pumps in the market.
Our head office is located at Chittagong with another 2 offices in Dhaka & Bogra with
distribution facilities around the country & showrooms are located in the big cities.
Besides the brand PEDROLLO with more than 350 products under 8 different categories,
‘Pedrollo nk Limited’ is also exclusively serving its customer base with other world-renown
pump manufacturers with brands like HCP for drainage pumps, Rovatti for multi stage pump
too.
2.2 Vision and values
Vision
Vision serves as the framework for our Roadmap and guides every aspect of the business by
describing what we need to accomplish in order to continue achieving sustainable, quality
growth.
People: Be a great place to work where people are inspired to be the best they
can be.
Portfolio: Bring to the world a portfolio of quality pumps that anticipate and
satisfy people’s desires and needs.
Partners: Nurture a winning network of customers and suppliers, together we
create mutual, enduring value.
Planet: Be a responsible citizen that makes a difference by helping build and
support sustainable communities.
Profit: Maximize long-term return to shareowners while being mindful of our
overall responsibilities.
Values
Values serve as a compass for our actions and describe how we behave in the world.
OCP on Accounting Information System of Pedrollo NK Ltd. 7
Leadership: The courage to shape a better future
Collaboration: Leverage collective genius
Integrity: Be real
Accountability: If it is to be, it’s up to me
Passion: Committed in heart and mind
Diversity: As inclusive as our brands
2.3 Department of Human Resource
The human resource departments achieve the objectives of the organization as well as the
goal of department-
Recruitment, Selection & Placement of the employees.
Promotion, Transfer, Demotion & disciplinary action of the employees.
Leave of the Employees.
Ensure all festival & Incentive bonus.
Induction of newly appointed employees.
Identification of problems of employees.
Ensure Competency Assessment Report for all employees, yearly or Interim.
2.4 Products line
OCP on Accounting Information System of Pedrollo NK Ltd. 8
Application: Maximum liquid temperature +65 °C *Ambient temperature up to +40 °C *Burst pressure > 40 bar *Protection: IP 65 *VOLTAGE: 230 V - Frequency: 50/60 Hz *Max current: - 10 A EASYPRESS I - 16 A EASYPRESS II
Performance: Max flow rate: 200 l/min (12 m³/h) *Working pressure: 10 bar *Start-up pressure: 1.5 bar
Application: *Mano-metric suction lift up to 9 m (HS) *Liquid temperature between -10 °C and +40 °C *Ambient temperature between -10 °C and +40 °C *Max. Working pressure 10 bar *Continuous service S1
Performance: *Flow rate up to 160 l/min (9.6 m³/h) *Head up to 96 m
Application: Manometric suction lift up to 7 m *Liquid temperature between -10°C and +40°C *Ambient temperature up to +40°C *Max. working pressure 10 bar *Continuous service S1
Performance: Flow rate up to 180 l/min (10.8m³/h) * Head up to 103 m
Application: Manometric suction lift up to 7 m *Liquid temperature between -10°C and +90°C *Ambient temperature between -10°C and +40°C *Max. working pressure 10 bar (6 bar for 2CP25/130N) *Continuous service S1
Performance: Flow rate up to 450 l/min (27 m³/h) *Head up to 112 m
OCP on Accounting Information System of Pedrollo NK Ltd. 9
Application: Manometric suction lift up to 7 m Liquid temperature between -10 °C and +90 °C Ambient temperature between -10 °C and +40 °C Max. working pressure 10 bar Continuous service S1
Performance: *Flow rate up to 900 l/min (54 m³/h) *Head up to 74 m
Application: 1.5 m maximum immersion depth 2.Maximum liquid temperature +40°C 3.Passage of suspended solids up to Ø 10 mm 4.Suction down to 21 mm above ground level 5.180 mm minimum immersion depth for continuous service
Performance: 1.Flow rate up to 300 l/min (18 m³/h) 2.Head up to 14 m
Application: 1.10 m maximum immersion depth 2.Maximum liquid temperature +50 °C (Maximum liquid temperature +90 °C for a maximum of 3 minutes intermittent service) 3.Solids passage: - up to Ø 20 mm for RX 2/20, RX 3/20 - up to Ø 40 mm for RX 4/40, RX 5/40 4.Suction level: - 25 mm above ground level for RX 2/20, RX 3/20 - 50 mm above ground level for RX 4/40, RX 5/40 5. Continuous service S1
Performance: 1.Flow rate up to 380 l/min (22.8 m³/h) 2.Head up to 13 m
Application: 1.Maximum liquid temperature +35 °C 2.Maximum sand content 100 g/m³ 3.100 m immersion limit 4.Installation: - vertical - horizontal, with the following limits: up to 12 stagesor 11 kW 5.Starts/hour: 20 at regular intervals 6.Minimum flow rate for motor cooling 16 cm/s (0.5 m/s for 30 kW) 7.Continuous service S1
Performance: 1.Flow rate up to 1000 l/min (60 m³/h) 2.Head up to 390 m
OCP on Accounting Information System of Pedrollo NK Ltd. 10
3.1 Introduction
Chapter 3AIS in Modern
Business
OCP on Accounting Information System of Pedrollo NK Ltd. 11
“An accounting information system (AIS) is a system that collects, records, stores and
process data to produce information for decision makers” by Romney. An accounting
information system is generally a computer-based method for tracking accounting activity
in conjunction with information technology resources. The resulting statistical reports can
be used internally by management or externally by other interested parties including
investors, creditors and tax authorities.
AIS can be a very simple paper-and-pencil based manual system, a very complex system
using the very latest in computers and information technology, or somewhere these two
extremes. Regardless of the approach taken, the process is the same.
Characteristics of useful Information:
Relevant: Information is relevant if it reduces uncertainty decision maker’s ability
to make predictions, or confirms or corrects their prior expectations.
Reliable: Information is reliable if it is free from error or bias and accurately
represents the events or activities of the organizations.
Complete: Information is complete if it does not omit important aspects of the
underlying events or activities that it measures.
Timely: Information is timely if it is provided in time for decision makers to make
decisions.
Understandable: Information is understandable if it is presented in a useful and
intelligible format.
Verifiable: Information is verifiable if two knowledgeable people acting
independently would each produce the same information.
Accessible: Information is accessible if it is available to users when they need it and
in a format they can use.
3.2 Components of AIS
AIS can’t do anything’s without any its users. So the AIS and the people who use it must still
collect, enter, process, store, and report data and information. The paper and pencil or the
computer hardware and software are merely the tools used to produce the information.
Accounting information systems are composed of six main components:
People: users who operate the systems and perform various functions.
OCP on Accounting Information System of Pedrollo NK Ltd. 12
Procedures and instructions: both manual and automated, processes involved in
collecting, processing, managing and storing the data about the organization’s
activities.
Data: data that is related to the organization and its business processes
Software: application that processes the organization ‘s data
Information technology infrastructure: The actual physical devices(computer,
peripheral devices, and network communication devices)and systems that allows the
AIS to operate and perform its functions(to collect, store, process, and transmit data
and information)
Internal controls and security measures: That safeguards or secures the data in the
AIS.
3.3 How AIS can add value to an organization
As a support activity, the AIS adds value by providing accurate and timely information so
the five primary value chain activities can be performed more effectively and efficiently.
Well-designed AIS can do this by:
Improving the quality and reducing the cost of products or services.
Improving efficiency. Well-designed AIS can make operations more efficiently by
providing more timely information.
Sharing knowledge. A well designed AIS can make it easier to share knowledge
and expertise, perhaps thereby improving operations and even providing a
competitive advantage.
Improving the efficiency and effectiveness of its supply chain.
Improving the internal control structure. Security, control and privacy are
important issue in today’s world. AIS with the proper internal control structure
can protect systems from problems such as fraud, errors, equipment and
software failures and political disasters.
Improving decision making.
OCP on Accounting Information System of Pedrollo NK Ltd. 13
3.4 Principles of AIS
A sound accounting information system must be flexible and coat beneficial as these are
the principles of an effective AIS. Here in below those are described briefly.
Flexibility of Accounting Information System
Flexibility means that the system should be so much flexible that it can be changed when
necessary. Flexibility helps the organization to perform its task easily and quickly as they
want
Organizational Structure should flexible for improving their activities in different
situation.
Organizational Data structure should be very easy which will help the employee
to cope up with the system easily for the long run success.
Data Recovery system must be simple which will help the employee to recover
the lost data or previous data.
Cost effectiveness of Accounting Information System
Cost beneficial means the benefits of information must outweigh the cost of providing it.
Cost effectiveness indicates the minimizing process of cost which helps to maximize the
profit of an organization.
Data Documentation system is the process how data are maintained and stoke for
future.
Data Storing should be less costly because it reduces the level of profit.
Maintenance of Data Structure is the most costly activities in every organization so
they should maintain is chiefly.
Usefulness of Accounting Information System
Some time a success of a company depends on the usefulness of AIS. If AIS provides
more useful data or information with a proper way & also in time, than it will help the
organization to achieve the goal easily. Here in below I provide some information about
usefulness of AIS in Private company sector.
Relevant data means if data reduces uncertainty decision maker’s ability to make
predictions, or confirms or corrects their prior expectations as they demand.
OCP on Accounting Information System of Pedrollo NK Ltd. 14
Reliability of data means if it is free from error or bias and accurately represents
the events or activities of the organizations
Accuracy of data means if it is free from error or bias and misrepresentation
Timely data means if it collected and provided in time for decision makers to
make decisions and for user’s generating information.
3.5 Concepts of AIS among Private sector in Bangladesh
A proper structural Accounting Information System (AIS) is so important part of an
organization. All private organization maintain separate department for Accounting
Information System (AIS). The name of their department is FAD. For performing their
activities they need the help of Information Technology Department (IT). IT department
help them by providing computerized and technological support. FAD work centrally for
connecting all branches of organization. They maintain a distributed information system.
Every branch maintain separate server for updating information. FAD collects that
information via different software and manually generates information as they need. But
some information is collected through Fax, Phone and Letter because of lack of their
technological opportunity. On the other hand sometime a branch collects some
information from FAD by the same way but there are some restrictions for providing
information to the user.
After collecting the information they manually generate information. That information is
in printed copy. They prepared two copy of data and then one copy of data are send to
the Audit Committee and others are preserved for evidence. After auditing the data the
audit committee make information themselves and again sends it to the FAD division.
Then they analysis the information and publish or provide the information to the user. By
this way the FAD works and maintains all accounting rules & regulation with help of
information technology. In the view of that it is easy to say that Accounting Information
System is totally mixed with their system and tiring to speed up their system for
achieving the success. So it can be said that they maintain their AIS in a proper structural
way within a separate department.
Some information about FAD department is given below.
OCP on Accounting Information System of Pedrollo NK Ltd. 15
Name of the department: Financial Administration Division (FAD)
Activities of the Department:
Data collection
Data maintenance
Data management
Data control
Information generation
Strength of the Department:
Experienced employee
Stable structure
Good internal controlling syste
Maintain GAAP
Internal audit committee
Limitation of the Department:
It maintains distributed data structure which increases the risk of data
hacking and data lost.
It maintains both manually (printed) and computerized system that why it
is too costly for them.
Some time data are collected manually (through mail, messenger etc) so
false data can make error in report.
They process data manually (on hand calculative processing) that’s why it
needs much time for preparing report for user.
Future Plan: Give a new technological structure, more features and services in
organizational sector.
OCP on Accounting Information System of Pedrollo NK Ltd. 16
Relation of FAD with network:
Network connects all servers within a family. They maintain a distributed networking
system where every server is connected each other. FAD maintains a server which they
use for collecting data from several servers as they need for generating information or
preparing report for external or internal user.
Accounting to an old saying-‘measurement affects behavior’. This means that employees
tend to focus their effort primarily on those takes that are measured and evaluated.
Budgets are financial planning tools where performance reports should be developed on
the basis of responsibility accounting. We know that different companies used different
techniques for their internal or external reporting. Most of them used more than one
technique. In below I describe some activities of reporting system FAD use for them.
Internal reporting:
Daily: Most of the activities are performed as daily basis like cash transaction,
every day expanse(e.g. entertainment of client, fuel for generator), online
transaction}
Monthly: Salary sheet, equipment requisition,
Quarterly: They prepare quarterly financial report for internal audit body.
Yearly: They prepare yearly budget report, financial report.
Performance report: In every half of the fiscal year employees bound to provide
their performance report to HR department. And every department prepares a
half yearly performance report about their activities and provides it to governing
body.
External reporting
Yearly: They prepare tax report & financial report.
Others: Some time they prepare different types of report as on demand of client
and government.
3.6 Cost effectiveness of Accounting Information System
Cost beneficial means the benefits of information must outweigh the cost of providing it.
Cost effectiveness indicates the minimizing process of cost which helps to maximize the
profit of an organization. If AIS is more costly than it reduce profit ratio of an
organization but if it effective and efficient and need low cost to maintain than it help the
OCP on Accounting Information System of Pedrollo NK Ltd. 17
organization many way. Like it maximize the profit, reduce the time for handling the
client and generating information in low cost.
Data documentation: Private organization maintains the printed and
computerized data documentation control system in this regard they need to
store huge data for daily activities that are too costly for them.
Data storing: Private organization have many branches, every branch maintain
several server of computerized data storing and store house for printed
document storing.
Maintenance of data structure: Private organization maintains a fixed data
structure which is less costly and effective for them.
OCP on Accounting Information System of Pedrollo NK Ltd. 18
Chapter 4AIS Explore in
Pedrollo
Accounting Information System
Revenue
Sales
Sales Return
Cash Collection
Expenditure
Purchase
Purchase Return
Cash Disbursement
Payroll
Conversion
Planning
Resource Management
Logistic
Administration
Capital
Investment
General Ledger
OCP on Accounting Information System of Pedrollo NK Ltd. 19
4.1 Accounting information system
AIS Is a system of collection, storage and processing of financial and accounting data that is
used by decision makers. An accounting information system is generally a computer-based
method for tracking accounting activity in conjunction with information technology
resources. The resulting statistical reports can be used internally by management or
externally by other interested parties including investors, creditors and tax authorities. It
includes education in the latest database management techniques and system modeling
approaches, and provides the Internet implementation experience necessary to practice
systems development in today's technological environment. Pedrollo nk follow these
procedures of AIS are as follows:
OCP on Accounting Information System of Pedrollo NK Ltd. 20
4.1.1 Revenue
Revenue process includes:
Sales process
Purchase order: A purchase order (PO) is a commercial document issued by a buyer
to a seller, indicating types, quantities, and agreed prices for products or services.
Bangladeshi pumps manufacturing Pedrollo nk ltd. submits a purchase order of 500
pcs of casing to Micro Fiber Company Limited.
Price Verification: Micro fiber company ltd (seller) submit a price quotation of Tk
1000 per pcs to Pedrollo nk ltd. (buyer). Buyer verifies the price and confirm the final
price.
Sales order: A sales order records the customer's originating purchase order which is
an external document. The customer's PO is the originating documents which trigger
the creation of the sales order. In a manufacturing environment, a sales order can be
converted into a work order.
Credit Limit: As a regular customer, The Pedrollo nk ltd. gets a credit facility of Tk
7,00,000 from Micro Fiber company ltd. After receive the PO, the company
immediately verify the buyers credit limit for future operations.
Inventory & sales preparation: After checking the credit limit, the seller checks the
availability of the product in warehouse. If the product is available and matches with
the buyer’s sample, then the seller prepares the goods for shipment as per the
buyer’s requirement.
Prepare shipment documents: Seller sends the goods to the buyer after preparing
the invoice and packing list. After that seller update the sales record accordingly.
Update accounts receivables & General Ledger: Seller updates the accounts
receivable as per the sales record and prepare monthly statement and general
ledger accounts.
OCP on Accounting Information System of Pedrollo NK Ltd. 21
Sales return process
Receive goods from customer: Buyer (Pedrollo nk ltd) returns 50pcs of defective
goods to the seller. The billing departments of seller match the return goods with
the original sales invoice while receive.
Warehouse & Inventory: Warehouse checks the condition of the returned goods. If
it is in repairable condition then repair it and send to the buyer or update the
inventory. If it is not in repairable condition, it consider as scrap.
Update sales record: After receiving the sales return, seller update the sales return
record and prepare a credit memo and send it to customer.
Update account receivable: After the sales return, seller updates the account
receivable accounts, cash record and general ledger.
Cash collection process
Cash receive: Seller receives cash/cheque payment from buyer and prepare a cash
receipt journal while it match with the original sales invoice.
Update account receivable: After receiving the cash payment, seller updates the
accounts receivable accounts and general ledger.
4.1.2 Expenditure
Expenditure process includes:
Purchase Process
Where information technology is not heavily ingrained Traditional Purchasing processes
tend to be characterized by high levels of bureaucracy, encumbered with manual
authorization (often requiring multiple signatures independent of the order value.), slow
communications and a focus on unit price rather than long term commodity arrangements.
The diagram below provides an example of a traditional purchasing process.
OCP on Accounting Information System of Pedrollo NK Ltd. 22
Authorized purchase
requisition
Select vendor
Prepare purchase order and send to
vendor
Receive goods (if match) and
prepare receiving record
Update account payable
Update account payable
Update inventory record (after
return)
Update general ledger
Receive invoice from vendor and Update inventory
Purchase return (if need)
OCP on Accounting Information System of Pedrollo NK Ltd. 23
Purchase requisition & Authorized purchase requisition: A purchase requisition
provides authorization for the Procurement Department to initiate a purchasing
transaction. The requisition form is available from the Procurement Department,
and contains a complete list of information that is required to complete a purchasing
transaction.
Vendor selection: The vendor selection process can be a very complicated.
Purchase order: A completed purchase requisition will be reviewed and approved in
the Procurement Department according to the organization’s policy for requisition
approval. Once the requisition has been approved, it will be used to create a
Purchase Order (PO).
Receive goods: Vendor prepares to supply the goods and service to the buyer after
receives the PO. Buyer prepare a receiving record after receive the goods.
Update inventory record: Buyer receive invoice from seller and update the inventory
records.
Update accounts payables: Buyer updates the accounts payable after the new
purchase record.
Sales return & update accounts payables: Buyer updates the accounts payable if any
purchase return occur.
Update General Ledger: Buyer updates the general ledger as per the purchase
records.
Purchase return process
A purchase return occurs when a buyer returns merchandise that it has purchased from a
supplier.
Rejected goods return from customer: Goods can be return to vendor for various
reasons with a authorization of return.
Return goods with a debit memo: Return goods after match with the purchase
invoice and send a debit memo to the vendor.
OCP on Accounting Information System of Pedrollo NK Ltd. 24
Update account payable, inventory record & general ledger: Update account
payable and inventory record after receiving refund or credit memo from vendor
against return.
Cash disbursement process
Cash disbursement means the payment of money against purchase.
Identify the due invoices: Identify the vendors invoices which payment is still due
and prepare for payment.
Payment to vendor and update the cash record: Payment of the vendor against the
due payments after cheque signs and updates the cash records.
Update account payable and general ledger: Account payable and general ledger
accounts will upgrade after payment to vendor.
Payroll process
The payroll is the amount of money that a company pays its employees at any given time.
Sometimes every two weeks, or sometimes once every month
Time sheet submission & checking: Employee submits there time sheet where there
working time was recorded. Authority will approve that after checking/correction
the working hours.
Prepare payroll register & voucher: The payroll register will prepare as per the
corrected working hours.
Payroll voucher and transfer fund in payroll bank: Payroll voucher will create as per
the payroll register. The fund will transfer to the payroll bank and update general
ledger.
OCP on Accounting Information System of Pedrollo NK Ltd. 25
4.1.3 Conversion
Planning: Business planning is a process that involves the creation of a mission or
goal for a company. The process of business planning can be very broad,
encompassing each aspect of the operation.
Resource Management: The process of using a company's resources in the most
efficient way possible is considered as resource management. These resources can
tangible resources such as goods and equipment, financial resources, and labor
resources such as employees. Resource management can include ideas such as
making sure one has enough physical resources for one's business.
Logistics: Logistics is defined as a business planning framework for the management
of material, service, information and capital flows.
3.1.4 Administration
Capital:
Capital is the money that is going to be invested in a business. Some of the money will come
out of from personal investment. Some of the money may come from another source of
financing, such as a bank or a small business center loan. That’s the capital for starting a
business. Knowing how much capital needs to start a business will be a deciding factor on
the type of business might be start.
Investment:
Investment encompasses a wide variety of funding options. While funding for capital
investment is generally in the form of common or preferred equity issuance, it may also be
through straight or convertible debt. Funds invested in a firm or enterprise for the purposes
of furthering its business objectives. Capital investment may also refer to a firm's acquisition
of capital assets or fixed assets such as manufacturing plants and machinery that is expected
to be productive over many years.
OCP on Accounting Information System of Pedrollo NK Ltd. 26
General Ledger:
The general ledger is a collection of the group of accounts that supports the value items
shown in the major financial statements. It is built up by posting transactions recorded in
the sales daybook, purchases daybook, cash book and general journals daybook. The
general ledger can be supported by one or more subsidiary ledgers that provide details for
accounts in the general ledger. For instance, an accounts receivable subsidiary ledger would
contain a separate account for each credit customer, tracking that customer's balance
separately. This subsidiary ledger would then be totaled and compared with its controlling
account (in this case, Accounts Receivable) to ensure accuracy as part of the process of
preparing a trial balance.
OCP on Accounting Information System of Pedrollo NK Ltd. 27
Chapter 5Standard
Accounting Practices
OCP on Accounting Information System of Pedrollo NK Ltd. 28
5.1 Introduction
In most organizations, the accounting function is the single largest user of IT. All systems
that process financial transactions impact the accounting function in some way. As end
users, accountants must provide a clear picture of their needs to the professionals who
design their systems. The principal cause of design errors that result in system failure is the
absence of user involvement. Standard accounting practical by Pedrollo nk ltd. are as
follows:
5.1.1 Journal record
In this part described about a company’s regular transactions. According to the all the most
common financial transactions are economic exchanges with external parties.
Pedrollo nk Ltd.
General Journal
Date Code Voucher No
Particulars Ref: Debit Credit
Jan. 1, 2014 A1000 D0F 101 Cash 1,500,000
A2000 Bank 500,000
S1000 Capital 2,000,000
(Starting business with cash & bank)
Jan. 3, 2014 I14000 D0F 105 Prepaid office rent 60,000
A1000 Cash 60,000
(Office rent paid in Advance)
Jan. 5, 2014 A9000 D0F 108 Machineries 300,000
A1000 Cash 200,000
L1000 A/C payable 100,000
(machine purchase with cash and credit)
Jan. 9, 2014 I3000 D0F 110 Raw materials 200,000
L1000 A/C payable 200,000
(raw materials purchase on credit)
Jan. 10, I8000 D0F 115 Advertisement 10,000
OCP on Accounting Information System of Pedrollo NK Ltd. 29
2014A1000 Cash 10,000
(advertisement paid by cash)
Jan. 11,
2014
A6000 D0F 117 Furniture 150,000
A1000 Cash 150,000
(furniture purchased by cash)
Jan. 15,
2014
I6000 D0F 127 Office supply 55,000
A2000 Bank 55,000
(office supply purchased with check)
Jan. 23,
2014
D0F 132 Insurance policy 100,000
A1000 Cash 50,000
A2000 Bank 50,000
(Insurance paid by cash & bank)
Jan. 31,
2014
I7000 D0F 139 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Feb. 3, 2014 A4000 D0F 145 Inventory 30,000
A2000 Bank 30,000
(Inventory purchased by check)
Feb. 10,
2014
I5000 D0F 151 Salary 25,000
A1000 Cash 25,000
(Salary paid by cash)
Feb.15,
2014
A1000 D0F 159 Cash 200,000
A3000 A/C receivable 50,000
I1000 Sale 250,000
OCP on Accounting Information System of Pedrollo NK Ltd. 30
(sales by cash and account)
Feb.25,
2014
L1000 D0F 167 A/C payable 100,000
A1000 Cash 100,000
Adjusting transaction)
Feb.28,
2014
I4000 D0F 173 Wage 10,000
A1000 Cash 10,000
(wage paid by cash)
Feb.28,
2014
I7000 D0F 180 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Mar. 10,
2014
I5000 D0F 188 Salary 25,000
A1000 Cash 25,000
(salary paid by cash)
Mar. 15,
2014
A7000 D0F 197 Computer 30,000
A1000 Cash 30,000
(computer purchased by cash)
Mar. 27,
2014
A1000 D0F 208 Cash 320,000
A3000 A/C receivable 80,000
I1000 Sales 400,000
(sales by cash and account)
Mar. 31,
2014
I7000 D0F 214 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Apr. 5, 2014 I6000 D0F 221 Office supply 15,000
L1000 A/C payable 15,000
OCP on Accounting Information System of Pedrollo NK Ltd. 31
(O/S purchased by credit)
Apr. 10,
2014
I5000 D0F 229 Salary 25,000
A1000 Cash 25,000
(Salary paid by cash)
Apr. 25,
2014
L1000 D0F 236 A/C payable 100,000
A2000 Bank 100,000
Adjusting transaction)
Apr. 30,
2014
I7000 D0F 241 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
May. 1,
2014
A8000 D0F 249 Delivery truck 150,000
L1000 A/C payable 100,000
A1000 Cash 50,000
(truck purchased with cash & account)
May. 9,
2014
I5000 D0F 257 Salary 25,000
A1000 Cash 25,000
(Salary paid by cash)
May. 31,
2014
I7000 D0F 264 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
June. 8,
2014
A1000 D0F 272 Cash 50,000
A3000 A/C receivable 50,000
(adjustment entry)
June. 10,
2014
I5000 D0F 279 Salary 25,000
OCP on Accounting Information System of Pedrollo NK Ltd. 32
A1000 Cash 25,000
(Salary paid by cash)
June. 30,
2014
I7000 D0F 284 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
July. 3, 2014 I14000 D0F 292 Prepaid office rent 60,000
A1000 Cash 60,000
(Office rent paid in Advance)
July. 9, 2014 I5000 D0F 305 Salary 35,000
A1000 Cash 35,000
(Salary paid by cash)
July. 20,
2014
A3000 D0F 314 A/C receivable 300,000
I1000 Sale 300,000
(sales on account)
July. 31,
2014
I7000 D0F 323 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Aug. 8,
2014
I5000 D0F 331 Salary 35,000
A1000 Cash 35,000
(Salary paid by cash)
Aug. 25,
2014
S1000 D0F 339 Capital 50,000
A1000 Withdraw/ Cash 50,000
(withdraw from the capital)
Aug. 31,
2014
I7000 D0F 345 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
OCP on Accounting Information System of Pedrollo NK Ltd. 33
Sep. 5, 2014 I3000 D0F 356 Raw materials 100,000
A2000 Bank 100,000
(raw materials purchase with check)
Sep. 6, 2014 I9000 D0F 362 Transportation 10,000
A1000 Cash 10,000
(transportation cost paid by cash)
Sep. 10,
2014
I5000 D0F 369 Salary 35,000
A1000 Cash 35,000
(Salary paid by cash)
Sep. 30,
2014
I7000 D0F 378 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Oct. 2, 2014 I10000 D0F 389 Machinery maintenance 20,000
A2000 Bank 20,000
(machinery maintenance paid by check)
Oct. 10,
2014
A8000 DOF 395 Delivery truck 35,000
A1000 Cash 35,000
(Salary paid by cash)
Oct. 31,
2014
I7000 DOF399 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Nov. 8,
2014
I5000 DOF 406 Salary 35,000
A1000 Cash 35,000
(Salary paid by cash)
Nov. 21,
2014
A1000 DOF 409 Cash 200,000
OCP on Accounting Information System of Pedrollo NK Ltd. 34
A3000 A/C receivable 150,000
I1000 Sale 350,000
(sales on account, bank & cash)
Nov. 30,
2014
I7000 DOF 414 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Dec. 1, 2014 I12000 DOF 423 Tax 80,000
A1000 Cash 80,000
(tax paid by cash)
Dec. 5, 2014 I5000 DOF 431 Salary 35,000
A1000 Cash 35,000
(Salary paid by cash)
Dec. 20,
2014
I13000 DOF 447 Profit distribution 100,000
A1000 Cash 100,000
(profit distributed by cash)
Dec. 31,
2014
I7000 DOF 452 Office rent 10,000
I14000 Prepaid office rent 10,000
(adjusting transaction)
Dec. 31,
2014
I5000 DOF 466 Salary 35,000
L1000 A/C payable 35,000
(salary is not paid yet)
Total 5,570,000 5,570,000
5.1.2 Cash book
Larger firms usually divide the cash book into two parts. The first part is the cash
disbursement journal that records all cash payments, such as accounts payable and
OCP on Accounting Information System of Pedrollo NK Ltd. 35
operating expenses. The second part is the cash receipts journal, which records all cash
receipts, such as accounts receivable and cash sales.
Pedrollo nk Ltd.
Cash book
For the year ending December 31,2014
Date Code Voucher No Particulars Credit
3-Jan I14000 D0F 105 prepaid office rent 60,000
5-Jan A9000 D0F 108 machinery 200,000
10-Jan I8000 D0F 115 Advertisement 10,000
11-Jan A6000 D0F 117 Furniture 150,000
23-Jan A5000 D0F 132 Insurance policy 50,000
10-Feb I5000 D0F 151 Salary 25,000
25-Feb L1000 D0F 167 A/C payable 100,000
28-Feb I4000 D0F 173 Wage 10,000
10-Mar I5000 D0F 188 Salary 25,000
15-Mar A7000 D0F 197 Computer 30,000
10-Apr I5000 D0F 229 Salary 25,000
1-May A8000 D0F 249 Delivery truck 50,000
9-May I5000 D0F 257 Salary 25,000
10-Jun I5000 D0F 279 Salary 25,000
3-Jul I14000 D0F 292 prepaid office rent 60,000
9-Jul I5000 D0F 305 Salary 35,000
8-Aug I5000 D0F 331 Salary 35,000
25-Aug S1000 D0F 339 Capital 50,000
6-Sep I9000 D0F 362 Transportation 10,000
10-Sep I5000 D0F 369 Salary 35,000
10-Oct I5000 DOF 395 Salary 35,000
8-Nov I5000 DOF 406 Salary 35,000
1-Dec I12000 DOF 423 Tax 80,000
OCP on Accounting Information System of Pedrollo NK Ltd. 36
5-Dec I5000 DOF 431 Salary 35,000
20-Dec I13000 DOF 447 Profit distribution 100,000
31-Dec C/B 975,000
Total 2,270,000
5.1.3 Trial Balance
Trial balance is the equal balance part for the accounting process. An accountant should
provide a balanced trial balance result to made a next step of preparing income statement
of an organization and as well as the balance sheet of an organization. Based on that all
revenue and expenditures are included for calculating this part. The source of information is
the relievable for all transactions collected from ledger that ready to disclose the financial
information for the both external and internal purposes. All tracked of transactions posted
into two different sides. One side is debit items and another side is called credit items side.
It actually prepared for monthly, quarterly and common in yearly.
Pedrollo nk Ltd.
Trial Balance
For the year ending December 31, 2014
Code Particulars Debit Credit
A1000 Cash 975,000 -
A2000 Bank 145,000 -
I1000 Revenues/sales - 1,300,000
A3000 Accounts receivable 530,000
A4000 Inventory 30,000 -
I3000 Raw materials 300,000 -
I6000 Office supply 70,000 -
I7000 Office rent 120,000 -
A5000 Insurance policy 100,000 -
I8000 Advertisement 10,000
A6000 Furniture 150,000 -
OCP on Accounting Information System of Pedrollo NK Ltd. 37
I4000 Wage 10,000 -
I5000 Salary 370,000 -
I9000 Transportation 10,000 -
I10000 Machinery maintenance 20,000 -
A7000 Computer 30,000 -
A8000 Delivery truck 150,000
A9000 Machinery 300,000
I12000 Tax 80,000
S1000 Capital Stock 1,950,000
L1000 Accounts Payable 250,000
I13000 Profit distribution 100,000
Total 3,500,000 3,500,000
5.1.4 Profit and loss accounts
Income Statement is the set of all incomes and expenditures. That means all revenues and
expenses these are incurred for maintaining the business operations are given in the income
statement to find out the excess of income over expenditure or excess of expenditure over
the income. It actually prepared for monthly, quarterly and common in yearly. The all period
it would be better that the balance of excess of income over expenditure for any company.
From this stage the only result forwarded the next stage the preparing of Balance Sheet.
Through this account this item going to next year or period. It shown in the Balance Sheet
under the retained earnings on stockholders equity.
Pedrollo nk Ltd.
Profit and loss accounting
For the year ending December 31,2014
Code Particular Amount Amount
I 1000 Revenue/sales 1300000
OCP on Accounting Information System of Pedrollo NK Ltd. 38
Total income 1300000
Expenditure (salary and benefits)
I 4000 Wages 10000
Salary 370000
I 7000 Office rent 120000
I 8000 Advertisement 10000
I 3000 Raw materials 300000
I 9000 Transportation 10000
I 10000 Machinery maintenance 20000
I 6000 Office supply 70000
I 12000 Tax 80000
I 13000 Profit distribution 100000
Total expenditure 1090000
Excess of income over expenditure 210000
5.1.5 Retained earnings
Retained earnings are the increasing balance part for the accounting process. An
accountant should provide a balanced Retained earnings result to made a next step of
preparing Balance Sheet of an organization and as well as the new Retained earnings of an
organization. Based on the result of income statement that account is included for
calculating this part.
Pedrollo nk Ltd.
Statement of Retain Earning
For the year ending December 31,2014
Code Particular Amount
S 2000 Beginning RE 310000
OCP on Accounting Information System of Pedrollo NK Ltd. 39
Net operating income 0
Dividend 0
Ending RE 100000
Retain earning 210000
5.1.6 Balance Sheet
Balance sheet is the financial feeling hart of an organization. This part is completed with
the two systems. Like one British process and or American process. Both processes have
two different sides. One is called assets side and another side is called liabilities and
owner’s equity/ stockholders equity. Companies are all current assets and as well as fixed
assets are recorded under the assets column, such as cash deposit, inventory, land,
buildings etc. On the other hand all the company’s liability and equity recorded under the
liabilities and owner’s equity/ stockholders equity column, such as accounts payable,
common stock, retained earnings etc.
Pedrollo nk Ltd.
Balance sheet
31, December 2014
Code Particular Amount Amount
Assets (current assets)
A 1000 Cash 957000
A 2000 Bank 145000
A 3000 A/C Receivable 530000
A 4000 Inventory 30000
A 5000 Insurance policy 100000
Total current assets 1780000
Fixed assets
A 6000 Furniture 150000
A 7000 Computer 30000
A 8000 Delivery truck 150000
OCP on Accounting Information System of Pedrollo NK Ltd. 40
A 9000 Machinery` 300000
Total fixed assets 630000
Total assets 2410000
Liability and owners equity (current liability)
L 1000 Accounts payable 250000
Shareholders’ equity
S1000 Capital stock 1950000
S 2000 Retain earning 210000
Total liability and owners equity 2410000
OCP on Accounting Information System of Pedrollo NK Ltd. 41
6.1 Major Findings
Major Findings:
This study has focused on the computerized accounting information system in Pedrollo nk
ltd. The main findings about the study are given in below.
Chapter 6Conclusionary
Aspects
OCP on Accounting Information System of Pedrollo NK Ltd. 42
They maintain separate department for Accounting Information System (AIS). The
name of their department is FAD. FAD has some problem like, distributed data
structure, manual data processing and risk of security. But it has also some
strength like, good internal controlling system, internal audit committee and
stable org. structure.
The Pedrollo nk maintain both manual and computerized system for performing
the daily operations of AIS.
The computerized transaction processing system is categorized into software and
web based system.
In Pedrollo nk, they use self developed software for performing transaction and
they also use local and foreign software for preparing report and it also helps to
performing other activities.
They use many different main software that use to performing transactional
activities and transferring data. It has some advantage like, decentralized system,
minimum risk of data lost and speedy transaction system. And the negative side is
it needs much time to collect information, risk of data hacking and it has no auto
data processing system.
They maintain website for their internal and external user for performing
transaction and providing lots of information to them.
The client’s data are processed in both batch and real time processing system.
Daily, monthly, quarterly, yearly and performance report are prepared for internal
and external reporting.
Pedrollo nk maintain a stable organizational structure, a complicated manual and
computerized file structure, easy data recovery system, costly data documentation
& storing system. Their AIS can also provide relevant and reliable data’s.
6.2 Recommendations
The following points are recommended after the study.
Pedrollo nk maintain a fixed organizational and data structure which can create
problem for new employee to cope up with the existing system.
OCP on Accounting Information System of Pedrollo NK Ltd. 43
They use decentralized web based transaction and data storing system, which
create problem for financial administration division (FAD) for collecting data, so
they should use centralized system for increasing the effectiveness of AIS.
The main software different customized operating software which is not effective
enough for generating report or information, so they should develop new software
for better performance.
They should give more emphasize on their manual (mail & fax) data transferring
system.
They should increase more safety for protecting data hacking, error and misuse of
data.
6.3 Conclusion
The accounting information system of Pedrollo nk ltd. is in the primitive stage. They have
separate AIS department. From the above analysis and discussions, it may conclude that
Pedrollo nk made their operation through combination of both manual and
OCP on Accounting Information System of Pedrollo NK Ltd. 44
computerized system. They use computerized system generally for operating, data
transferring and storing purposes. But the impact of computerized AIS is not significant.
Thought they maintain a web-site, but all the transactions are not web based. They
regularly prepare financial statements for evaluation of performance and for external
reporting and performance evaluation they prepared financial statements and published
annually. The users of AIS were satisfied about their AIS and internal control system.
They record and collected their source document through computer. They think their AIS
are cost beneficial and flexible. They use real time & batch processing for updating their
information. But their AIS were not so effective to provide information.
They should give more emphasis on internal control system, safeguarding assets and
information generation or reporting system. In case of external reporting and internal
reporting their actives have lots of gap.
References
Marshall B. Romney, Paul John Steinbasrt, “Accounting Information System” (10th Edition)
(February 2006), Pearson Prentice – Hill.
OCP on Accounting Information System of Pedrollo NK Ltd. 45
Paul Bocij, Andrew Greasley, Simon Hickie, “Business information system: technology,
development and management” (1st Edition),(2009), Pearson Education, Ltd.
BRIAN Williams, Stacey C. Sawyer, “Using Information Technology” (9 th Edition), (2010),
McGraw Hill.
Sumon Das, Shilpi Das, “Accounting & Auditing”, the Bangladesh Accountant, October-
December 2008.
Website of pedrollo
Website of wikipidea.