Question

Short Answers (Half a page with real world examples)

1. Give some examples of Fulfillment, Procurement in a small business such as a coffee shop or some other type of small business.

2. In SAP ERP a sales order is entered only once, by the sales people. It need not be entered a second time, in Accounting, to keep the books. Briefly explain why that second entry is not needed.

3. Briefly describe two CRM activities.

4. What are the three benefits of CRM?

5. What are the three cost elements for a manufactured item?

6. When might the SAP ERP system block the entry of the receipt of goods in the receiving department?

7. Describe the general ledger with regard to SAP ERP.

8. Why is developing product costs in a large company such a time-consuming task? Why is an integrated system an advantage?

9. List ways in which an ERP system can prevent or minimize fraud in a company.

10. Describe the difference between managerial and financial accounting and list an artifact from each.

Answer 1

1. Examples of Fulfillment in a small business:

• Flat rate and regional rate pricing
• On-demand ordering and distribution
• No minimum orders
• Easy to use
• Custom packaging

Example of Procurement in business: direct procurement systems involve the integration of purchasing into a company's supply-chain management system, delivering the right supplies at the right time.

2. In SAP ERP a sales order is entered only once, by the salespeople. It need not be entered a second time, in Accounting, to keep the books. Briefly explain why that second entry is not needed?

SAP R/3 now called SAP ERP is software that offers modules for Sales &Distribution, Materials Management, Production Planning, Quality Management and etc. I think a second entry by accounting isn’t required because SAP ERP is an integrated system where all functional areas run on central data. It removes identical and unnecessary data to help save time and operation expenses.

3. Describe two activities of CRM:

• One-to-one marketing: Once a customer is categorized, the company can tailor products, promotions, and pricing accordingly.
• Salesforce automation: Occurrences of customer contacts are logged in the company's database.
• Sales campaign management: This software lets a company organize a marketing campaign and compile its results.
• Marketing Encyclopedias: This software serves as a database of promotional literature about products.
• Call center automation: When customers call a company to get assistance with a company's products, representatives can query a knowledge management database containing information about the product.

4. Benefits of CRM:

1. Improved Informational Organisation -> CRM allows you to store a vast list of customers and any important information regarding them. Access to their file is even more convenient than before due to the cloud, so no matter who it is that is helping the customer in question, they’ll have the same actionable data instantly available. This will result in less wasted time for clients and employees.

2. CRM Improves Your Customer Service -> Your time is valuable, but so is your customers’ time. And, should your customers experience a problem that needs resolution, they’re going to be unhappy unless that problem can be taken care of quickly. With CRM, as soon as a customer contacts your company, your representatives will be able to retrieve all available activity concerning past purchases, preferences, and anything else that might assist them in finding a solution. In many cases, your more experienced representatives, armed with past information and history, will be able to locate a solution within the first few minutes, thanks to an accessible database of potential issues. And, should a solution not be readily apparent, then bringing in other representatives, or even crowdsourcing for answers through customer portals is a simple matter. With CRM, customer support becomes a walk in the park.

3. Automation of Everyday Tasks -> Completing a sale is never as easy as just getting a customer to agree to commit. Along with the surface details of any sale, there are hundreds of smaller tasks that must be completed in order for everything to function properly. Forms need to be filled out, reports need to be sent, legal issues need to be addressed—these ancillary chores are a time consuming, yet vital aspect of the sales process. The best CRM systems are designed to take the burden of many of these tasks from off the shoulders of your employees, thanks to the magic of automation. This means that your representatives will be able to focus more of their efforts on closing leads and resolving customer pain points, while the automated CRM system takes care of the details.

4. Improved Analytical Data and Reporting -> Miscalculated data should not be the reason you cannot succeed, with CRM this is no longer a possibility. CRM systems store information in one place which leads to improved analyzing of the data as a whole. Easily integrated with different tools or plugins, you have the ability to generate automatic reports to maximize your time. Personalize your dashboard views to quickly locate information needed such as customer information, sales goals, and performance reports to reach untapped opportunities. With better reporting data you can make resourceful and effective decisions to reap the rewards in customer loyalty and long-run profitability.

5. Besides these above benefits, we can shortly say  -> Lower costs, Higher revenue, Improved strategy, and performance, measurement are the benefits of CRM.

5. Cost Elements for a manufactured item:

costs of a manufactured item are direct materials, direct labor, and manufacturing overhead.

Direct Labor -> Direct Labor costs, also known as labor costs, refer to any funding given to workers who produce and build the products in question. Examples of labor include assembly line workers, machine operators, and installation clerks. Indirect labor refers to individuals who are working for the company but have indirect roles in the manufacturing process. Indirect workers include janitors, supervisors, and security guards.

Direct Material -> Direct Material costs refer to the raw materials that actually create the product in question. Raw materials cover anything from the finished product itself to any bolts, nuts, and wood that went into building the original product. The final product is considered “raw” since it may be used as raw materials for another product for another business. Material costs also include direct materials that play a role in the manufacturing process, such as tiny motors, buttons, and light bulbs.

Manufacturing Overhead -> Manufacturing Overhead costs are those associated with the manufacturing process, excluding the raw materials and labor funding. The machinery and equipment used to build the products must undergo frequent maintenance and funding must be available to complete repairs. Overhead costs also cover any maintenance or rebuilding of the manufacturing facilities, such as expanding the production line or adding new lighting in the factory. Any expense or cost that does not fit into direct material costs and labor costs may fall into the manufacturing overhead category.

6. When might the SAP ERP system block the entry of the receipt of goods in the receiving department?

Depending on the configuration settings, the SAP ERP system might block entry of the receipt if the discrepancy is too large.

or

Discrepancies in a system can cause an SAP ERP system block depending on the differences between the input of data and the actual quantity needed to process the order.

7. Describe the general ledger with regard to SAP ERP:

A general ledger is a primary accounting log with all of the data that keeps a company's record organized. It accounts for all the data and balances many different transactions within different departments by bringing all of the data together. Transactions that have been recorded to the SAP ERP update the general ledger immediately.

8. Why is developing product costs in a large company such a time-consuming task? Why is an integrated system an advantage?

Developing new products require different materials, labor more, but in order to find the materials that fit the needs of the product, much research must be conducted. The amount of data compiled is often very time-consuming which integrated systems can help reduce. They can also assist with accuracy and efficiency within the process.

9. List ways in which an ERP system can prevent or minimize fraud in a company. :

Shorty answer: Security (authorization), financial transparency, organization

Descriptive answer:

1. Prevention -> The old adage “prevention is better than cure” most definitely rings true. Prevention is certainly the best way of managing fraud. The tighter the controls and procedures, the more difficult it is for unscrupulous employees to take advantage. ERP steps up controls and procedures to prevent fraud and corruption.

2. Anti-abuse -> ERP can assist companies in ensuring compliance with legal requirements and accounting rules. Many cases of internal fraud result from the abuse of the accounting system. ERP prevents this abuse and can assist businesses in mitigating fraud.

3. Automation -> Manual systems are wide open to abuse because documentation can be misplaced or changed, with little or no audit trail. ERP gives companies tighter control of processes and the benefit of comprehensive audit tracking. Alerts can be built into the system so that an email is sent to someone in authority for approval before any major changes are actioned.

4. Segregation of duties -> The cornerstone of any audit control separates duties between people. ERP enforces segregation of duties and strict approval mechanisms, which prohibit fraudsters from performing functions they are not authorized to. Modern tools like electronic funds transfers can also be automated to remove any unnecessary risks around manual payments.

5. Biometrics -> Procedures outside of the accounting system are also open to abuse. Biometric controls can help protect a business against theft by providing physical access control over who can access the stock room etc. Your ERP can assign access rights and keep an updated record of access granted.

ERP is the perfect backbone to give any business the control and security required to take advantage of this new technology and its benefits.

10. Difference between managerial and financial accounting:

The difference between financial and managerial accounting is that financial accounting is the collection of accounting data to create financial statements, while managerial accounting is the internal processing used to account for business transactions.

The following categories also show the differences between financial and managerial accounting:

SYSTEMS -> Financial accounting only cares about generating a profit and not the overall system of how the company works. Conversely, managerial accounting looks for bottleneck operations and examines various ways to enhance profits by eliminating bottleneck issues.

REPORTING FOCUS -> Financial accounting is focused on creating financial statements to be shared with internal and external stakeholders and the public. Managerial accounting focuses on operational reporting to be shared within a company.

AGGREGATION -> Financial accounting looks at the entire business while managerial accounting reports at a more detailed level. Managerial accounting focuses on detailed reports like profits by product, product line, customer, and geographic region.

EFFICIENCY -> A business’s profitability and efficiency are reported through financial accounting. Managerial accounting reports on what is causing a problem and how to fix that problem.

TIMING -> Financial statements are due at the end of an accounting period, while managerial reports may be issued more frequently, to provide managers with relevant information they can act on immediately.

PROVEN INFORMATION -> Considerable precision is needed to prove that financial records are correct. Financial accounting relies on this accurate data for reporting, while managerial accounting frequently deals with estimates as opposed to proven facts.

STANDARDS -> When managerial accounting is made for internal consumption there is no set of standards to compile that information. On the other hand, financial accounting must follow various accounting standards.

TIME PERIOD -> Financial accounting looks to the past to examine financial results that have already been achieved, so it is historically focused. Managerial accounting looks to the future with forecasting.

VALUATION -> Financial accounting is concerned with knowing the proper value of a company’s assets and liabilities. Managerial accounting is only concerned with the value these items have on a company’s productivity.