Accounting Information Systems: The Processes and Controls, 2nd Edition

INTRODUCTION TO PAYROLL AND FIXED ASSET PROCESSES (STUDY OBJECTIVE 1)

This chapter is an extension of Chapter 9, as it continues to present the vital processes of acquiring the resources needed to run the business, recording the resulting liabilities, and making the related payments at a later date. The distinction here is the types of resources involved and the frequency of the record keeping and payments.

The most frequent types of revenues and expenditure transactions were discussed in Chapters 8 and 9. The processes related to buying goods from vendors and selling goods to customers presented in those chapters are so common that they are typically encountered every day. These processes are sometimes called routine business processes because they involve the transactions that a business encounters on a regular, recurring basis. The volume of those transactions tends to be so large that the transactions and the related accounting activities become routine, almost like second nature, to the employees responsible for handling them. Therefore, specific authorization for each individual routine transaction is not necessary. For example, it would be an overwhelming task to specifically authorize every sale or purchase before it could be processed. On the other hand, there are many different types of transactions that do not occur regularly. They are sometimes called nonroutine transactions due to their limited occurrence and their requirement for specific authorization.

This chapter ...