ITP 320 Midterm Concepts

What is Distribution Channel?

The channel through which sales material reaches the customers. Ex. Wholesale

What are Assets?

What the company owns

How is a Vendor evaluated to be chosen for an RFQ?

1.Price 2.Quality 3.Delivery

What are the Components of Managerial Accounting CO?**

1.Profit center acc 2.Cost center acc 3.Cost element acc 4.Activity based costing 5. Profitability analysis 6.Product cost controlling 7.Internal orders

What are the 5 documents that make up the Procurement process?

1.Purchase Req 2.Purchase Order 3.Goods Receipt 4.Invoice 5.Payment

What are the main documents in a procurement process?

1.Purchase req 2.Purchase order 3.Goods receipt 4.Invoice 5.Payment

KNOW HOW TO DRAW PROCUREMENT CYCLE (8 POINTS)* Lec 4 slide 17

1.Requirements determination 2.Source determination 3.Requisition assigned to Vendor 4.Order processing 5.Reminder for delivery 6.Goods receipt and inventory management 7.Invoice verification 8.Payment

What are the types of Sales documents?

1.Standard order 2.Cash order 3.Rush order

What org elements are used in the SAP Procurement Process?* (7 point q on exam)

1.Storage Location 2.Plant 3. Company Code 4.Client 5.Purchasing Organization 6.Purchasing Group

What are the Functions of an ERP?*

1.To integrate business functions into one application 2.To run on top of an established database system 3.To replace legacy systems in orgs ex. SAP

What does a Purchase Requisition Contain?

1.What 2.How much 3.When

What are the three basic questions for Material Planning?

1.What materials are required? 2.How many are required? 3.When are they required?

What is the CO objective?

(Managerial Accounting) 1. to collect information on cost and profit center performance. 2. to identify if projects make money or not

What happens to the source identity for Primary and Secondary Cost elements? *

(Salaries, utilities, selling expenses)Maintained for primary cost elements but blurred for secondary elements.

What is the *Database layer* in a Three-Tier Client Server Environment?

-Lowest layer -It is responsible for the storage and retrieval of all data -It's job is to keep listening to requests.

What is the *Application layer* in a Three-Tier Client Server Environment?

-Middle layer -Brain of the system that processes data then provides input and output to its users - Also provides means of balancing load placed on DB server

What is the *Presentation layer* in a Three-Tier Client Server Environment?

-Top layer/Front end of the system -It presents the processed data to its users

What are ERP systems?

-Very large and extensive software packages used to manage a firms business processes.

What are the two ways a Purchase Req can be created?

1. Directly (Manually) 2.Indirectly (Automatically) via MRP, production orders, sales orders etc.

How does the money move from the different accounts in Invoice Processing?

1.Money first gets debited from Inventory and credited to GR/IR. 2.Next, money gets debited from GR/IR and credited to Vendor A/P 3.Finally, money gets debited from Vendor A/P and credited to Bank account of Vendor.

What are the main documents in a sales process?*

1.Order-accept the customers request for product/service 2.Delivery-shipping process that takes place within a plant 3.Invoice-bill the customer 4.Payment- receive and post payment from the customer

What is the FI objective?

1. to collect the data needed to prepare financial statements which give a consistent view of the companies health

What happens when a goods movement for the receipt of goods takes place?* EFFECT OF GOODS RECEIPT slide 39 lec 4

1.Material Doc created 2.Accounting Doc created 3.Stock qty updated 4.Stock Value updated 5.PO updated 6.Output can be generated.

What are the Components of FI?**

1.Accounts receivable 2.Accounts Payable 3.General Ledger 4.Special purpose ledger 5.Fixed assets 6.Banks

What are the traits of an acceptable Business Transaction?

1.Affects the financial position of the entity 2.Measurable in a currency 3.Affects at least two accounts 4.Assets=Liabilities + Equity 5.Debits=Credits

What is the org structure for Procurement?**

1.Client 2.Company Code 3.Plant 4.Storage Location

What is the org structure for sales?**

1.Client 2.Company code 3.Sales org 4.Distribution channel 5.Division

What are the Organizational elements for Sales? ***(7 points)

1.Company Code 2.Sales Organization 3.Distribution Channel 4.Division 5.Plant 6.Storage Location 7. Sales Area 8.Shipping point

What are the functions of Sales doc?

1.Delivery scheduling 2.Pricing 3.Availability check

Three phases of Implementation for SAP systems?

1.Development 2.Testing 3.Production

What are the four ways of Requisition sourcing? Lec 4 slide 23

1.Internal Sourcing Requirements 2.Source List 3.Outlined Agreement 4.RFQ

Name 3 Master Data needed for procurement. **(3 points)

1.Material master 2.Vendor Master 3.Purchasing info records

What is a Purchase requisition?

A document instructing the purchase dept to request a good for a specific time

What is a Document?

A document represents a transaction in the business process.

What is Shipping Point?

A fixed location that carries out shipping activities. Each delivery is processed by ONLY ONE shipping point.

What is a Purchase Order?

A formal request to a vendor for a specific material

What is a Client? (related to Client/server)?

A hardware/software environment that can make a request for services from a central repository of resources

What is Plant?

A manufacturing facility, a warehouse distribution center, or a place to store goods. Ex. DL00

What is a Profit Center?

A profit center is responsible for revenue generation and cost containment. Divided into profit centers based on region, function, and product.

What is an RFQ?

A request for Quotation is an invitation to a vendor by a Purchasing Org to submit a bid for the supply of materials.

What is a Business process?

A sequence of tasks or activities that produced desired outcomes

For each G/L account, what does the C.O.A contain?

Account #, Account name, and account functioning information

What is Cost element accounting?

Accounting used to organize costs. ex. Rent

What is Storage Location?

An area used to only store inventory. units that allow the differentiation of material stocks within a plant.

What is the Client???

An independent unit on the highest level of the SAP ex. A corporation, client 520

What is a Purchasing Organization?

Analogous to sales org. Unit structured to negotiate the general conditions of purchase for one or more plants.

What is the Org structure for Procurement??*

Client TOP Company Code Plant Storage Location BOTTOM

What is Configuration?

Configuration is the process of making standard software fit your business

What is Vendor Master?

Contains all the data necessary for processing biz transactions

What is Master Data?

Data that rarely changes. ex. Info about customers, products, vendors.

Two types of Allocations?

Distributions- A method to allocate Primary Cost elements Assessments-A method to allocate both primary and secondary cost elements

What is Sales Area?

Sales Area is a unique combo of Sales Org, distribution channel, and division.

What is a Server?

Hardware/software combination that can provide services to a group of clients in a controlled environment.

Two types of procurement?

Internal Procurement--> Planned orders External Procurement--> Purchase Requisitions

What is Purchasing Info record?

It is a record that contains info about a material and vendor that supplies that material

What is a Source list?

It is a record that displays the possible options to procure a material for a certain plant within a given time period.

What is Material Master?

It contains all data required to define and manage material. it integrated data from different dept (engineering, manufacturing etc.)

What is Allocations?

It enables you to periodically allocate amounts from sender objects to receiver objects

What is a Controlling area?

It is a group of company codes that we want to designate for cost accounting.

What is Chart of Accounts?

It is a group of general ledger accounts.

What is the silo effect?

It is a lack of information flowing between different groups

What is the Three-way Match? ** Slide 48 lec 4

It is a way to safeguard an orgs assets. It is when you compare the PO (target qty and price), goods receipt (actual qty) and invoice receipt (actual price) to ensure no mistakes were made.

What is Company Code?

It is an independent accounting unit. Balance Sheets and Profit and Loss statements are created at the company code level. Ex. US00

What is a Cost center?

It is responsible for cost containment but NOT revenue generation. They are also used to track where the costs are coming from.

What is Retained earnings?

It is the net income that is retained by the company and not distributed to the stakeholders.

What is a cost element?

It is used to categorize costs.

What is Division?

It's used to segment a business into product lines. Ex. BI

What is the difference between financial accounting(FI) and managerial accounting (CO)?

Managerial accounting is internal, flexible and mainly looks at cost and profit centers (provides info to people inside company- executives,senior management etc.) Financial accounting is external, and has many laws governing it (provides info about balance sheets and P&L statements to people outside company-shareholders etc.)

Are direct entries permitted in the GL account?

NO

Can you make direct entries in the AR or AP?

NO

If a purchase order is created, is there a change in inventory? *

NO

Can financial documents be deleted from the database?

NO. This prevents fraud because then people will be able to change the numbers to pay themselves etc. Instead, you reverse doc by creating new doc.

Do Purch Req and PO have an impact on FI??*

NOOOO. Goods receipt has an impact on MM and FI

Are customers and vendors in the GL account? If not, where are they?

No, they are in sub ledger accounts

Example of a database?

Oracle, SAP HANA

Difference between primary cost elements and secondary cost elements?

Primary cost elements are cost elements whose costs originate outside the CO. They are linked to expense accounts in the G/L Account Secondary elements are used exclusively in controlling for allocations and settlements.They do not correspond to any G/L account in FI

What is a Outline Agreement?

Purchase requisitions are satisfied via previous agreements: 1.Contracts 2.Scheduling Agreements

What is the Business Process flow for Procurement?

Purch req--> Purch order--> Goods receipt-->Invoice posting-->Payment

What is the future of a purchase requisition?

Purchase Order

What is an Income statement?

Representation of a companies Revenues and Expenses for a given period of time

What is a Purchasing group?

Responsible for certain purchasing activities

What is Sales Organization?

Responsible for the sales and distribution of goods and services, negotiating sales conditions, and carrying out business transactions. Ex UE00

What is Revenue and Expense?

Revenue- inflow of cash Expense-outflow of cash Net income= Revenues-Expenses

How are costs allocated? Explain what it is

Statistical key figures. These figures define some measurable value to the cost center, like sq footage CPU hours etc, and thus ensure accurate allocation Provide the foundation for accurate and effective cost allocations between cost objects Utilized to support internal cost allocations involving allocations, assessments, and distributions

What is the General Ledger?

The General Ledger provides all the "acceptable" business transactions from the viewpoint of an accountant.

Why is it a three-tier architecture?

They are loosely coupled and do not depend on each other

What are Liabilities?

What the company owes

What is Internal Sourcing?

When the requisition for materials can be satisfied internally. You do a stock transport order which moves the stock within the company to the place you want it to be

Can a transaction have an effect on both FI and CO?

YES

Is the G/L account used by one or more company codes?

Yes.

What is credits?

an increase in one of the accounts with a normal balance in credit OR a decrease in one of the accounts with a normal balance of debit.

What is debits?

an increase in one of the accounts with a normal balance of debit OR a decrease in one of the accounts with a normal balance of credit