Organizations have many different business processes, such as completing a sale, purchasing raw materials, paying employees, and paying vendors. Each business process has either a direct or an indirect effect on the financial status of the organization.
For example, completing a sale directly increases cash or other assets, while paying employees directly reduces cash or increases liabilities. Purchasing new, efficient equipment also directly affects assets and/or liability accounts; yet this transaction is also expected to indirectly increase sales and assets, as it provides for increased productivity and an expanded customer base. Therefore, we can see why, as business processes occur, the accounting information system must capture and record the related accounting information.
A business process is a prescribed sequence of work steps performed in order to produce a desired result for the organization. A business process is initiated by a particular kind of event and has a well defined beginning and end.
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