business cycle


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business cycle

  2. 2. HYPER FOOD ENTERPRISE ii CONTENT CONTENT…...……………………………………………………………………………………ii INTRODUCTIONS OF BUSINESS ACTIVITIES…………..…………………..………………1 Management directory Business profile REVENUE CYCLE……………….…………….………………………………….……………..2 Activities Document used Method to invoicing customers Method crediting account receivable EXPENDITURE CYCLE…………………………………….……………………………..….....4 Activities Document used Method used for valuing inventory Process of payment HUMAN RESOURCE MANAGEMENT & PAYROLL CYCLE……………...………………..6 Human resource management Payroll cycle business activities Document use in payroll cycle Award provided for employee Internal control CONVERSION CYCLE…………………………………………………………………………..9 Activities Method used Non accounting system Internal control FINANCIAL CYCLE……………………………………………………………………………11 Activities Sources of capital
  3. 3. HYPER FOOD ENTERPRISE iii INTRODUCTIONS OF BUSINESS ACTIVITIES. Company : HYPER FOOD ENTERPRISE Location : No 1. Jalan 2 Persimpangan 3 Taman Industri 4 46000 Petaling Jaya, Selangor Phone : 03-5555 6677 Fax : 03-5555 6688 Annual sales : RM 420 000.00 Total employees : 150 persons Management directory: MN Izwan Abu Bakar, President And Chief Executive Officer Syed Amirul Asyraff, Vice President Of Product Development Faiz Zek Zamani, Vice President Of Sales Ahmad Arsyad, Human Resources Executive Ahmad Firdaus, Plan Manager Business profile: Since 2011, hiper food enterprise has become a supplier of verity of food at malaysia that base at selangor. We produce verity of food like kuih, crackers and biscuit. We also accept orders from international customers, such as from indonesia and singapore. In order to achieve our goal every year, this company will increase the production every celebration day. For instance malay celebration day, deepavali celebration, chinese new year and many others. In this business, we provide vehicles for delivery. We have a lorry and a car. Besides that, we use air transportation for the international customers.
  4. 4. HYPER FOOD ENTERPRISE iv REVENUE CYCLE Activities: In this cycle of revenue, first activities for our business are accepting the request order from the local and international countries. We also have delivery services. So, when the customers made orders, we will deliver the goods to them. After the goods arrived to their place, we will invoice the related bill of the sales to customer, such as sales invoice. Besides that, we also accept the return good from customers for the problems of goods. Document used: When we deals with our customers, we provide some document to prove and record the transaction to more easier process for revenue cycle. Usually, when the customer make order we issues the sales order invoice and will be proceed to the next step of revenue cycle. Below are the explanation for the document use: - Sales order invoices Sales order invoices is used when the customers order our product. When credit limit is approved. - Credit approval form When our customer made purchases RM2000 and above, they can make choice whether want to make cash purchases or credit purchases. - Delivery note When the goods are in delivery , we will produces delivery note because delivery note is used when the goods that were orders from customers have arrived to their places. - Picking slip
  5. 5. HYPER FOOD ENTERPRISE v The dispatch department used the picking slip to follow-up and to eventually complete the delivery to the customers. Picking slip is used to pick-up goods from store. - Tax invoice We provide 5% taxes from every nett sales from customers and we will give the tax invoice to customers for the delivery only. - Bill of lading When we have the international orders, and we want to sent the goods by ship or aircrafts, we will provide bill of lading for the goods. This, to avoid from any unexpected risk. - Account receivable ledger When the customers make a payment. We will debit the subsudiary account receivable. If the customer make credit purchase we provide the credit term 2/10. Method to invoicing customers: - Record the sale in the appropiate account In order to record the sales. First, our company record in the sales jounal then record to the sales ledger. Who purchase by credit they will record as our creditors. - Produces credit note. Credit note issued when the customers return the goods that have a problems and expired. By the way, we just accept the return in 10 day start the goods delivered to them. Method crediting account receivable: - Open invoice method Open invoice method are issued to the customer that delay their payment and have trouble in their payment. This invoice is to easily to resolving the differences account balance beetwen customers and our business.
  6. 6. HYPER FOOD ENTERPRISE vi - Balance forward method We check the outstanding balance of account receivables to proceed for next sales to customers. Usually, we use this method to the customers that have no problem in this transaction for the payment. EXPENDITURE CYCLE Activities: In this activities, if production department want to purchase raw material, or the leader each department want to make purchase for office uses. They need to make a requisitition purchase. There is request for purchases to purchase department in order to purchase goods from suppliers. Then, we will order the goods to be purchase. After that, we will receive the goods from suppliers and the goods will be keep in storekeeping or install to office. Document used: In expenditure cycle we used only four document that to complete the purchases transections. First step is purchase department receive the request for purchase to make order to supplier and proceed to the next document, as below: - Purchase requisition form A document used by a department or the storeperson for requesting that the purchasing department obtain a required item . - Purchase order form An order is placed once a decision is made regarding the items to be purchased and the best suppliers of the items is found. The order is placed in writing using a document called purchase order form. - Goods receive note
  7. 7. HYPER FOOD ENTERPRISE vii The good receive note is raised after the goods received have been checked for quantity and quality. If the quality of the goods is not expected, the goods will be returned to the suppliers. - Material requisition note. The goods received from the suppliers are stored in the secure place. The receiving department used material requisition note to place the items. Materials requisition note is for internal use of stock for the purposes of production. Method used for valuing inventory: - First-in, first-out method. This method assumes that the items of stock which were received earliest leave the stores first. Our business used FIFO Method to revaluation the iventory. The value of the inventory issues are base on the purchase price, and issues to production which material first in to store. - Weighted average method. This method used an average cost per unit which is calculated immediately after a quantity of an item is added to the stock. Process of payment: - Cash Cash is popular and convenient form of payment for transactions involving small amounts. The document involved in the recording of disbursements is called a ‘petty cash voucher’. - Cheque A cheque is written order from a person which is made to a bank directing it to pay a certain sum of money to another person. The document involved with this is called ‘cheque form’.
  8. 8. HYPER FOOD ENTERPRISE viii - Bank transfer A form of payment in which a payer requests that the bank where they have their account transfers money to the account of payee, which might be in the same bank or another financial institution. - Bank cheque A method of payment that eliminates the normal risks (like a cheque being dishonoured) for the receipient while also giving them the advantage of receiving the payment in the form of cheque. - Electronic funds transfer Is the electronic method of making payments. In this process, instead of drawing a cheque, a payer gives an istruction to the bank in an electronic form together with a list of payees for the bank to transfer funds. - Standing order Is a written request to the bank to pay a certain sum of money to another party for a specific period, or until the request is withdrawn. HUMAN RESOURCE MANAGEMENT & PAYROLL CYCLE Human Resource Management. Activities: On HRM activities, we improves an organisational productivity. We also care for the quality of the workers. Besides that, we may think for improving quality of working life such as we might care for the workers` condition. In improving the nationalisme and the loyalty the country among workers. - Organisational productivity. - Increase quality of work - Improve quality working life
  9. 9. HYPER FOOD ENTERPRISE ix - Statutory and legal complaince. Payroll Cycle Business Activities. In this business, payroll for the employee are divided by two remuneration, Wages and salary. Payroll functions is grouped by eight business activities within the payroll cycle. First, we gethering the time and attendance of the employee. After that, we calculate the total payment for employee, included basic payment, overtime, bonus and other related. Then, we have tax computation. Then, we prepare the payroll record. As shown below are the functions of payroll. - Gathering time and attendance data - Calculation of gross amount of wages payable - Tax computation - Preparation of payroll records - Disbursement of payroll - Disbursement of PAYG, superannuation and deductions - Issue payment summaries and pay advice - Pay Other Payroll Related Expenses Document use in payroll cycle: Document for gathering time and attendence data. Our company used clockcards method. When an employee come to work he just only put his card into a clock mechine that has specially design to print the specific place,'time in for work', and 'time out '.each day the clock automayically adjust itself and prints the times in a different column. Document for the payroll register. Payroll calculation are facilitated by using books or sheets of paper that are subsequently bound into books and stored for future references. These books are known as payroll register.
  10. 10. HYPER FOOD ENTERPRISE x Document for employee earnings records. It is necessary to keep the earnings of an employee in a record for the purpose of remitting tax and other deductions under autorisation from the employee and requirement of law. Award provided for employee: - Normal hours of work An employee under the industrial award is expected to work a minimum number of hours in a week. The hours work under the minimum attract an extra rate of pay. - Minimun rate of pay Minimum raatepay is the rate of pay to the employee. The rate is base on the degree of experience, qualifications and skilled. - Overtime rate of pay The payment give to the employee if they work over the normal hours work. We provide 5% rate base on normal rate. - Leave entitlements o Sick leave – a certain number of days in a year are allowed for sick leave. This are paid at the normal rate. o Annual leave – the employee can have a annual leave 14 days a year. They are paid at the normal rate. o Long service leave – usually we give leave to the workers that did not ever request for leave. So, we will give them long service leave. o Family leave – employee will paid at normal rate if they are in responsible for their family, like parental leave, carer’s leave and bereavement leave. - Rest period and other allowance The allowance given to the employee when they have the extra work outside the company. For instance, the employee go to selas the product at booth stations.
  11. 11. HYPER FOOD ENTERPRISE xi Internal control: - Only appropiately approval persons, in accordance with management criteria, are to be added to the payroll. - An autorised person especially suppervisor department, is to maintian time record at approve time worked. - The payroll is to bear the signiture of eacg person involve in its preparation with specific details of individual work carried out. - Every employee is to sign time card and where cash payment is made, sign a document to acknowledge the correct pay is receive. - If cash or cheque payment are made, any unclaim wages are to be handle to reponsible person for safekeeping. - The return to the taxation office are to be filled promptly and forwarded on due date. - all payroll register are to be serially number so as to prevent the loss or additions of extra entries. - The signatory of cheque is to check the payroll register before signing cheque. CONVERSION CYCLE Activities: In this cycle, the raw material that we used is like flour, eggs and oil. In this conversion cycle are related to the production department. So, in this business we have our own factory and store. All the raw material will be convert to product by production department. The transaction in the conversion process involve these functions: - acquisition of material. - acquisition of labour. - transfer of material,labour and overhead into production. - transfer to finished goods into inventory. - sale of the inventory Method used: The methods are used in this cycle which are Periodic inventory method. At all we have two method to calculate the inventory, as shown below: - Periodic inventory method
  12. 12. HYPER FOOD ENTERPRISE xii Under this method, no detailed inventory record is fact, only very basis records are kept and there is no elaborate inventory system at all.also, the quantity of inventory on hand at the beginning and at the end of an accounting period is determined by a physical count, or a stocktake. The value of inventory on hand is obtained by apllying appropriate unit price to the quantity of inventory. It is suitable for our small organisations where owner/service provider inspects the stock daily and also purchases new items if we undertake a special job. Else, this method is suitable for small organisations. In a similar manner to raw material, when using the periodic inventory method, there is no record of the goods produced or purchased for sale. Generally used by retail organisations where manual systems are maintained. - The perpentual inventory method Is used when there is a need to maintain detailed records of the movements of raw material and finished goods. Although this method can be maintained manually, the computer system makes the operations simple and keeps the record relatively accurate. An accurate estimation of the stock on hand can be obtained directly from these records. The items transferred to production and the stock on hand can be valued using various methods. The most popular methods used to value the stock are: -First in,first out(FIFO) -Weighted average method Non accounting system: 1) Product design First,it has to be designed. It refers to the component parts of the product. Our product are designed by our own designer. Efficient and effectiveness design from our product cuts down on production costs while maintaining the quality, durability and functionality of our product. 2) Production planning and scheduling In production planning and scheduling, products used within the production sequence are scheduled based on the priority and desired completion dates. Production and scheduling techniques depend on the standard production pattern of an organisation. 3) Material requisition planning(MRP) Is a production information system which basically plans the requirement with regards to the material used in the production of an item. This is in the form of bill of a material which lists material, components and so on that are needed. These plans assist in
  13. 13. HYPER FOOD ENTERPRISE xiii maintenance of adequate inventory levels which ensures that inventory is available when it is needed. 4) Just-In-Time systems(JIT) Used to minimise the investment in raw materials as well as finished products. It is a system where a firm arrangement is made between a supplier and a manufacturer to supply certains items for a certain period. This perios is normally more than a few years because the capital cost of the communication system which needs to be established may be prohibitive enough to avoid making changes frequently. 5) Computer aided manufacturing It reduce production costs when repetitive tasks are extensively used in production process. The advantages are: - Improved productivity. - Improved quality. - Reduced labour costs. Internal control: - All material requistion from productions are properly autgorised by storekeeper. - Material is cannot to be issues from stores without a proper requisition. - Production scedules are to be approved by the supervisor. - All job tickets should be approved by the supervisor. - All inventory record in the store are checked for accuracy. - Finish goods should be transfered to the store base on transfer note which is duly acknowledged by a storeperson. - Proper record on fixed assets, including their repair and maintainance, should be maintained. - The rate of expired or broken product by inspection in monitored to confirm that falls within the norm. FINANCIAL CYCLE Activities: In this financial control, is to gain our capital to expand our business. In this organisations, we have owner capital and others parties that shares and joint debenture with us. So, in financial cycle they have their own functions they is raising capital, acquiring and maintaining assets and do the financial reporting.
  14. 14. HYPER FOOD ENTERPRISE xiv Sources of capital: - Shares In generally we asking the public to apply the shares. We have two types of shares, ordinary shares and preference shares. When thy have the interest from the shares they would be our capital. - Debentures This sources of gaining the capital is get the benifit from the lender. This is very usufull to generate our capital. - Long-terms loans Usually long-terms loans is the owing from the bank. We make this long-term loans is to gain our capital in order to start up our business and expand the business. - Preference shares Preference shares are issued as either cumulative or non-cumulative. Cumulative preference give the shareholder the right to carry forward the fixed percentagedividend inro future year if we unable to pay. - Retained earning It is prudent for an organisation to retain some of the yearly profits earned for future business used. - Other source capital When fund are required for working capital or for other short term need of the organisation, it is prudent to borrow for the shortest term for capital. The other source capital is trade creditors, factory of debtors and bank loans. Financial and performance reporting: In order to finish the record of financial we need to provide some of the statement such as trial balance, statement of financial performance, statement of financial position and the statement of cash flows and performance report. All of these document are need to be complete at the end of the year.
  15. 15. HYPER FOOD ENTERPRISE xv Internal control: - Maintain the debenture ledger. - Have costudy of debenture certificates, issue new ones and cancel old ones. - The board of directors should outhorised large or long term loans. - No assets are not to be purchases without a proper approval. - Invesment in assets over a predetermined value needs to be evaluated using approve techniques. - An inspection report and a receiving report from the user are receive before payment is process. - The details of the assets should be recorded on the assets register when the order is made and the date of receipt should be completed from the receiving report. - Assets should be physically inspected in order to moniter their assistance and conditions.