Pag 04 خطأ استخدم علامة التبويب الصفحة الرئيسية لتطبيق Headi

Pg 04خطأ استخدم علامة التبويب الصفحة الرئيسية لتطبيق Heading 1 على

Explain why and how the FI process is integrated with other processes? (Give an example of the integration between the FI process and other process)

What does purchasing organization level mean in the organizational data of the procurement process?

What are the three models of this level (use an example of a company from your imagination or a real a company to show the difference between the three models)?

Consider this scenario: HappyHome is a factory specialized in manufacturing some ranges of home appliances. HappyHome is purchasing, on credit, some office supplies for its administrative staff. The total cost of these supplies is 3,500 SAR Record financial impacts of this purchase transaction.

Now, consider a scenario in which our factory HappyHome, sells home appliances to three customers on credit for 5,000 SAR; 3,000 SAR and 5,500 SAR respectively, and then receives payment at a later date. Record financial impacts of this sale transaction.

Paper For Above instruction

Enterprise Resource Planning (ERP) systems are integral to the efficient functioning of modern business operations, particularly through the integration of various core processes. The Financial Information (FI) process, which encompasses accounting, financial reporting, and asset management, is deeply interconnected with other enterprise processes such as procurement, sales, and manufacturing. This integration ensures data consistency, process synchronization, and real-time information sharing, thereby enhancing decision-making, compliance, and operational efficiency.

Understanding how the FI process integrates with other processes is crucial for grasping the holistic nature of enterprise systems. For example, in an ERP system, when a purchase order is created within the procurement process, it triggers various financial transactions. These include updating accounts payable, deducting inventory, and adjusting budget allocations automatically. This integration ensures that financial statements reflect real-time procurement activities, reducing errors and redundancy. Additionally, sales transactions not only generate revenue records but also update receivables and cash flow reports simultaneously, exemplifying seamless integration across processes.

At the core of procurement within ERP systems is the concept of a purchasing organization level, which defines how procurement responsibilities and data are structured across an enterprise. This level indicates whether procurement activities are centralized or decentralized. In a centralized model, a single purchasing organization manages procurement for multiple plant locations, promoting bulk buying and standardization. Conversely, a decentralized model assigns procurement responsibilities to individual plants or departments, allowing for localized decision-making. Hybrid models combine elements of both, adapting to organizational needs.

For instance, imagine a multinational electronics manufacturer. Model one, centralized procurement, might have headquarters managing all purchasing activities for subsidiaries, leveraging volume discounts and standard contracts. In model two, each regional office operates independently, handling their procurement, which caters to local preferences and supplier relations. The third, hybrid model, could involve central oversight for major components but devolved authority for localized procurement of consumables. Recognizing these models' differences helps in designing procurement strategies aligned with organizational goals.

Applying this understanding to a real-world scenario, consider HappyHome, a home appliance manufacturer. When HappyHome purchases office supplies costing 3,500 SAR on credit, the financial impacts include an increase in office supplies expense and a corresponding increase in accounts payable—credit liability—on the balance sheet. The journal entries record a debit to Supplies Expense and a credit to Accounts Payable, reflecting the obligation to pay in the future.

Similarly, when HappyHome sells appliances on credit to three customers for amounts of 5,000 SAR, 3,000 SAR, and 5,500 SAR respectively, and subsequently receives the payments, the financial impacts involve recognizing revenue and accounts receivable initially. Upon sale, the entries include a debit to Accounts Receivable and a credit to Sales Revenue. Once payment is received, the entries transfer the balances from Accounts Receivable to Cash, indicating the inflow of funds. These transactions collectively impact the company's income statement and balance sheet, highlighting the importance of accurate financial recording in enterprise systems.

In conclusion, the integration of the FI process with other enterprise processes is fundamental in creating cohesive, accurate, and real-time financial reporting and management. Different organizational models of procurement influence how data and responsibilities are structured, impacting overall efficiency and procurement strategy. Real-world examples, such as HappyHome, illustrate how financial impacts are recorded, emphasizing the role of precise transaction recording for organizational decision-making.

References

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