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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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Accounting Information Systems

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CONCEPTUAL
Accounting information systems are governed by five fundamental principles: control, relevance, compatibility, flexibility, and cost-benefit. The five basic components of an accounting information system are source documents, input devices, information processors, information storage, and output devices.
Special journals are used for recording transactions of similar type, each meant to cover one kind of transaction. Four of the most common special journals are the sales journal, cash receipts journal, purchases journal, and cash disbursements journal. Special journals are efficient and cost-effective tools in the journalizing and posting processes.
A general ledger keeps controlling accounts such as Accounts Receivable and Accounts Payable, but details on individual accounts making up the controlling account are kept in subsidiary ledgers (such as an accounts receivable ledger). The balance in a controlling account must equal the sum of its subsidiary account balances after posting is complete.
ANALYTICAL
A business segment is a part of a company that is separately identified by its products or services or by the geographic market it serves. Analysis of a company’s segments is aided by the segment return on assets (segment operating income divided by segment average assets).
PROCEDURAL
Each special journal is devoted to similar kinds of transactions. Transactions are journalized on one line of a special journal, with columns devoted to specific accounts, dates, names, posting references, explanations, and other necessary information. Posting is threefold: (1) individual amounts in the Other Accounts column are posted to their general ledger accounts on a regular (daily) basis, (2) individual amounts in a column whose total is not posted to a controlling account at the end of a period (month) are posted regularly (daily) to their general ledger accounts, and (3) total amounts for all columns except the Other Accounts column are posted at the end of a period (month) to their column’s account title in the general ledger.

Account balances in the general ledger and its subsidiary ledgers are tested for accuracy after posting is complete. This procedure is twofold: (1) prepare a trial balance of the general ledger to confirm that debits equal credits and (2) prepare a schedule to confirm that the controlling account’s balance equals the subsidiary ledger’s balance.

Guidance Answers to Decision Maker
Entrepreneur
The accounts receivable ledger has much of the information you need. It lists detailed information for each customer’s account, including the amounts, dates for transactions, and dates of payments. It can be reorganized into an “aging schedule” to show how long customers wait before paying their bills.
Controller
Much of the information you need is in the accounts payable ledger. It contains information for each supplier, the amounts due, and when payments are made. This subsidiary ledger along with information on credit terms should enable you to conduct your analyses.
Banker
This merchandiser’s segment information is likely to greatly impact your loan decision. The risks associated with the company’s two sources of net income are quite different. While net income is up by 10%, U.S. operations are performing poorly and Cuban operations are subject to many uncertainties. These uncertainties depend on political events, legal issues, business relationships, Cuban economic conditions, and a host of other risks. Overall, net income results suggested a low-risk loan opportunity, but the segment information reveals a highrisk situation.

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