Question One
1 Mark
Learning Outcome(s):
(LO1) Describe key issues related to enterprise systems and system integration
There are three types of data in an enterprise system, which are Organizational data, Master data, and Transactional data. Briefly explain the characteristics of the enterprise data.
ANS
1-ORGANIZATIONAL DATA
Organizational data are used to represent the structure of an enterprise.
Examples of organizational structure are companies,
subsidiaries,
factories,
warehouses,
storage areas,
sales regions.
organizational data elements
client,
company code,
plant
2-MASTER DATA
Master data represent entities associated with various processes. For example, processes involve buying materials from vendors and selling materials to
customers.
In this example,
customers,
vendors,
materials
are represented
in an ERP system using master data.
The most commonly used master data in an organization is the material
master. Materials are used in numerous processes. They are purchased, sold,
produced, and planned for. They are used in maintenance and service, and
in projects. Consequently, material master data are some of the most com-
plex and extensively utilized data in an ERP system. In contrast, other master
3 TRANSACTION DATA
Processes are executed in the context of organizational levels, involve
master data, and result in transaction data. Transaction data reflect the conse-quences of executing process steps, or transactions.
Examples of transaction
data are dates,
quantities,
prices,
payment and delivery
Question Two
1.5 Marks
Learning Outcome(s):
(LO1) Describe key issues related to enterprise systems and system integration
What is meant by Enterprise data management and why it needs alignment among various stakeholders?
ANS
Enterprise systems are one of the most complex and powerful information systems
in use today. As we explained in Chapter 1, this book will cover the world’s most
popular ES—SAP ERP—in great depth. Although you might have studied enter-
prise systems in a previous course, we provide a quick review of the key concepts
to refresh your knowledge and to place these concepts in an appropriate context
for the rest of this course. In this section we briefl y discuss the architecture of enter-prise systems, the SAP® Business Suite, SAP ERP, and the technology platform—
SAP® Netweaver—that forms the foundation for these applications
Data in an ERP system are used to represent the physical system in
which process steps such as creating a purchase order and receiving goods are
carried out. These steps generate data, which represent the outcomes of the
steps. There are three types of data in an ERP system: organizational data,
master data, and transaction data.
As we discussed earlier, a central component of any ERP system is the com-
mon database that stores data related to all the processes. Without this func-
tion, integrating the various processes would be diffi cult, if not impossible.
Therefore it is essential to understand how data are organized in an ERP
system. We address this topic in the following section. We then introduce the
different types of data that are stored in an ERP system, and we identify basic
data elements that are common to many processes. We will develop these top-
ics and introduce additional data elements in later chapters that discuss spe-
cifi c processes. For the purposes of this chapter we will restrict our discussions
to the procurement and fulfi llment processes introduced in Chapter 1.
Data in an ERP system are used to represent the physical system in
which process steps such as creating a purchase order and receiving goods are
carried out. These steps generate data, which represent the outcomes of the
steps. There are three types of data in an ERP system: organizational data,
master data, and transaction data.
Why?
Question Three
1.5 Marks
Learning Outcome(s):
(LO2) Identify principal enterprise systems architectures and implementation strategies
Discuss the difference between business function and business process, and explain how a business process cuts across functional lines in an organization.
ANS :
BUSINESS PROCESSES
Organizations exist either to serve some commercial purpose or to achieve
some social objective. They differ depending on the purpose or goal they are
trying to achieve, their ownership or management structure, and the regula-
tory environment in which they operate. Some organizations create and deliver
products or services to customers to make a profi t. For example, a bicycle
manufacturer produces a variety of bicycles and accessories. It then sells these
products to numerous retailers who, in turn, sell them to the fi nal consumers.
Other companies provide services, such as repairs to the bicycles. Yet others
provide the manufacturer with the parts and materials needed to make the
bicycles. Achieving the organization’s objectives involves many different types
of work. For example, the manufacturer must design the bicycles, identify what
parts it will use to make them, determine where to obtain these parts, produce
the bicycles, identify its customers, and market and sell the bicycles to them. In
addition, it must determine how to manage its money, its various facilities such
as factories and warehouses, and the many people that it must recruit, employ,
train, and retain. This work is completed in numerous processes.
Although organizations exist for many different purposes, vary greatly in
size and complexity, and operate in many different industries, they all exhibit
similarities in the ways that they operate. Regardless of their type or size, suc-
cessful organizations and industries use processes and enterprise systems to
complete the work needed to achieve their goals. Processes may vary slightly
depending on the unique characteristics of the industry or the structure of the
organization, but the basic activities can be recognized by anyone who has
developed a process view of business. Likewise, companies may employ differ-
ent enterprise systems to manage their processes. However, you can apply the
principles, concepts, and techniques explained in this textbook to most of
the enterprise systems you are likely to work with.
A business process, illustrated in Figure 1-2, is a set of tasks or activi-
ties that produce desired outcomes. Every process is triggered by some event,
such as receiving a customer order or recognizing the need to increase inven-
tory. The columns in the fi gure represent different parts, or functional areas,
within an organization, such as sales, warehouse, manufacturing, and account-
ing. Thus, the specifi c steps in the process are completed in different functional
areas. For example, when a retailer (customer) places an order for bicycles,
the manufacturer (seller) uses a specifi c process to ensure that the correct
Function business?!
Question Four
1 Mark
Learning Outcome(s):
(LO2) Identify principal enterprise systems architectures and implementation strategies
Explain the general ledger, subsidiary ledgers, and reconciliation accounts, and how they are related.
ANS :
Reconciliation accounts are general ledger accounts that consolidate data
from a group of related subledger accounts, such as customers and vendors.
The reconciliation account for customers is accounts receivable, and the rec-
onciliation account for vendors is accounts payable. Because the general led-
ger can include multiple reconciliation accounts, it is necessary to indicate
which subledger each reconciliation account is associated with. This informa-
tion appears in the reconciliation account for account type fi eld in the gen-
eral ledger account master data. These concepts are related to the accounts
receivable and payable accounting processes introduced at the beginning
of the chapter. These processes will be explained in greater detail later
in this chapter.
One special characteristic of reconciliation accounts is that it is not
possible to post data directly into them. Rather, data must be posted to sub-
ledger accounts, at which point they are automatically posted to the corre-
sponding reconciliation account as well. Thus, when a company sells products
or services to a customer on credit, the amount owed is noted in the custom-
er’s subledger account and is also posted to the corresponding reconciliation
account (accounts receivable). Likewise, when the company owes money to
a vendor for purchases it made on credit, this amount is noted in the ven-
dor’s subledger account and is simultaneously posted to the corresponding
reconciliation account (accounts payable). The balance in the reconcilia-
tion account (e.g., accounts receivable and accounts payable) is the sum of
the postings in the related subledger accounts (e.g., customers and vendors,
respectively).
We will consider subledger and reconciliation accounts in greater
detail in the process section of this chapter. We now turn our attention to
the key concepts involved in fi nancial accounting, beginning with accounting
documents
Some fi nancial data are not directly maintained in the general ledger. For
example, customer accounts, which track the amounts customers owe and
the payments they have made, are maintained separately for each customer.
Although it is necessary to track sales and payments separately for each cus-
tomer, it is not necessary to include each customer account in the general led-
ger. Similarly, data about each vendor and asset, such as an automobile, are
maintained in separate accounts. Vendor accounts track purchases from and
payments made to them. Asset accounts are used to track the purchase price
as well as increases and decreases in the asset’s value over time. Such accounts
are maintained in subsidiary ledgers or subledgers, and they are not part
of the general ledger.
Although customer and vendor accounts are not part of the general ledger,
the data in these accounts must be refl ected in the general ledger. Companies
accomplish this task by posting the data from subledger accounts into
special accounts in the general ledger called reconciliation accounts.
GENERAL LEDGER ACCOUNTING
General ledger accounting is based on the double entry accounting system,
where every transaction has both a debit entry and a credit entry. Recall that
accounts are divided into balance sheet accounts (Figure 3-5) and income (profi t
and loss) statement accounts (Figure 3-6). Balance sheet accounts are grouped
into assets, liabilities, and equity, while profi t and loss accounts are divided into
revenue and expenses. Figure 3-11 illustrates how postings are debited and
credited to these accounts using a “T” account. Debits are displayed on the
left side of the T account, and credits on the right side. An increase in an asset
account or an expense account results in a debit posting, whereas a decrease
results in a credit posting. Conversely, an increase in revenue or liability results
in a credit posting, whereas a decrease generates a debit posting. Below we
present several examples involving GBI to illustrate and clarify the concept of
postings. Please refer to Appendix 3A at the end of this chapter for the specifi c
accounts that are included in the examples
GENERAL LEDGER ACCOUNTS
The accounts in the general ledger are defined based on the selected COA. The
general ledger is an instantiation of the COA for a particular company and
can include some or all of the accounts in the COA. Like most master data,
the data in general ledger accounts are segmented by organizational level
(Figure 3-4). COA account data include a COA or client segment and a
company code segment.
The COA segment typically includes an account number, short and long
text, an account group, and an indication as to whether the account is a balance
sheet or a profi t and loss account. Each account is assigned a unique account
general ledger accounts, subsidiary ledgers, and reconciliation
accounts, to provide a complete picture of the fi rm’s fi nancial status.
Management accounting focuses primarily on the allocation of costs and
revenues to proper areas within the fi rm. Costs and revenues that are incurred
as the various business processes are executed are accumulated in various cost
objects. Firms then utilize these data to manage the organization.
2. Accounts Payable Accounting – Concerned with vendors and involve:
➢ sub-ledgers to track money owed to individual vendors: vendor master
➢ reconciliation accounts: Accounts payablereconciliation
References:
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