Riordan Manufacturing – Accounting Cycle Description Essay Example

transactions, and cash management.

The five cycles, including the fixed asset cycle, the conversion cycle, and cost accounting function implementation, provide essential information for management in decision-making. The fixed asset cycle ensures the long-term growth of a business through the monitoring of fixed asset acquisitions, depreciation, and disposals. As for the conversion cycle, it involves the efficient transformation of raw materials and labor into finished goods. Riordan Manufacturing utilizes the production cycle to achieve this goal. Bagranoff, Simkin ; Strand (2008) suggest that a production cycle aims to convert raw materials into finished goods efficiently.

The conversion process starts with the procurement of raw materials. To keep track of the timing of the orders and their arrival, Riordan makes use of a weekly scheduled orders receiving report. In addition, a raw materials usage form is utilized to determine the quantity of completed subassemblies and final products on a daily basis. The orders are processed by the sales department and added to the customer shipping and billing system. Once shipped, orders are monitored until their final destination is reached, with daily updates to the inventory system.

At the end of each year, Riordan Manufacturing conducts a physical inventory to identify discrepancies and complete the production cycle, which concludes with the transfer of finished goods to storage. As a global manufacturing company, Riordan has implemented various internal controls to enhance production, including scorecards, post-project reviews, auditing, and an inventory management and control process (Apollo Group, 2006).

Having established processes in place brings the benefit of checks and balances, ensuring that everything is accounted for throughout the entire production process, from the delivery of materials to the individuals involved

in each step, all the way to the delivery of the final product to the customer. Additionally, utilizing "score cards" that outline individual goals and track progress via charts involves everyone in the process. However, a potential drawback of this system is that it involves many steps and people, meaning that one error could lead to a chain reaction with severe consequences.

Integration of the Cycle can be achieved through implementation of an enterprise resource planning system (ERP), which is a new technology that has impacted accounting information systems, according to infor (2006). The ERP system integrates all organizational data and processes into one application using multiple components of software and hardware. This software combines formerly separate applications' data to facilitate synchronization of multiple systems.

Additionally, implementing an ERP system can standardize and reduce the number of specialized software required in larger organizations like Riordan Manufacturing (infor, 2006). One of the main benefits of ERP is its ability to integrate financial information. With an ERP system, all necessary paperwork for monitoring material deliveries to plants and customers can be streamlined into one process, reducing the chance for errors. This can streamline the production cycle for all four branches of Riordan Manufacturing, eliminating unnecessary and repetitive paperwork. To achieve successful integration, specific information systems are utilized in the conversion process. The production schedule is the first system used, indicating the quantity of raw materials on hand and whether products need to be ordered.

The production schedule incorporates various elements such as the inventory file that maintains a record of the product usage through inventory status reports. An inventory reconciliation report is used to audit the inventory.

Requests for materials are made through material requisition forms which help in creating a labor schedule based on supply and demand. Personnel files are consulted for this process. The cost accounting process integrates the cost of the entire production process.

To ensure accuracy in material and production cost during the conversion process for Riordan, a cost accounting system is indispensable for the flow of accounting information. Cost accounting centers on three main areas: Resource Usage and Cost Reports, Production Status Reports, and Miscellaneous Management Reports. Its focus lies in distinguishing between actual and budgeted cost of production and generating reports for job cost, process cost, and activity based costing. Through job costing information, the system deals with the labor, raw materials, and overhead cost of large-scale or custom products.

The study of business processes is the basis for activity based costing, which identifies where money has been spent and how spending can be optimized in certain areas. Process costing systems are used for products such as bottled water and gum, on a smaller scale than job costing. Riordan's success is not accidental, and their conversion accounting cycle plays a vital role in it. This paper has identified the five accounting cycles, explained Riordan's use of the conversion accounting cycle and examined the strengths and weaknesses of its internal controls related to the conversion cycle.

The article covers various aspects of integrating the conversion cycle into an enterprise-wide accounting information system. It explains the process and compares and contrasts the different types of information systems that are required for successful integration. The flow of accounting information through the organization is also discussed. Reference:

Apollo Group, (2006).

The Riordan Manufacturing Intranet Web site provides information on Inventory Management and Control. The website can be accessed at https://ecampus.phoenix.edu/secure/aapd/CIST/VOP/Business/Riordan/RioMfgHome002. The information was retrieved on August 6, 2008.

Bagranoff, N. A., Simkin, M. G., & Strand, C.

The 10th edition of "Core Concepts of Accounting Information Systems" was published by Wiley in 2008 in New York. In 2006, Infor also released their ERP SyteLine, which can be found on the Infor ERP SyteLine website at http://www, as of August 6, 2008. The text is enclosed in a paragraph HTML element.Here is the link to CopleyCG's PDF file for SyteLine Data Collection, available at copleycg.com/products_pdf/SyteLine%20Data%20Collection.pdf. This is in reference to Mack Loflin's Week Two Read Me First Class Discussion in 2008.

Obtained/ Retrieved