What is an ERP System?

• Multi-Tenacity - resources are shared amongst a large

pool of users
ERP stands for Enterprise Resource Planning
• Reliability - dependable accessibility of resources and
ERP system- type of software that integrates a variety of computation
business processes and functions into a single system
• Scalability - dynamic provisioning of data helps in
- includes modules for areas such as accounting, human avoiding various bottleneck scenarios
resources, customer relationship management, supply chain
management, inventory management, and production • Ease of Maintenance - users (companies/organizations)
planning. have less work in terms of resource upgrades and
management, handled by service providers of cloud
Primary objective - provide a single source of truth for all computing
business data, making it easier for companies to manage their
operations more efficiently and effectively Smartbook- a purely web-based ERP system for small
and medium sized enterprises.
What is Cloud Computing?
- software that easy to use, has deep
- a new way to deploy computing technology to give users the functionality, is accessible and is compliant with
ability to access, work on, share, and store information using BIR reporting requirements. It is best for small-
the internet. and medium-sized companies with their unique
qualities and special needs.
- 'Everything as a Service' (abbreviated as XaaS)
Smartbooks Cloud ERP system is composed of multiple
Types of Cloud Deployment
modules.
1. PRIVATE CLOUD- Internal Cloud
Smartbooks is composed of three major units:
- cloud-based infrastructure operated exclusively for
a single organization with all data protected behind 1. Transaction Processing- supports daily business
an internal firewall. operations with numerous reports, documents, and
- physically located at the company's on-site data messages from users throughout the organization.
center or can also be managed and hosted by a
third-party provider. Transaction processing consists of three different cycles:

2. PUBLIC CLOUD- External Cloud (a) revenue

- is available to the public where data are created
(b) expenditure
and stored on third-party servers. Service
infrastructure belongs to service providers that (c) project management.
manage them and administer pool resources.
3. HYBRID CLOUD- encompasses the best features of 2. General Ledger/Financial Reporting - produces the
the above-mentioned cloud computing deployment traditional Financial Statements, such as Income Statement,
models. It allows companies to mix and match the Balance Sheet, Statement of Cash Flow, Tax Returns,
facets of public and private cloud that best suit their Reports / Schedules, and other reports mandated by the
requirements government.

features of Cloud Computing: 3. Management Reporting - provides internal management

reports needed for decision making.
• Agility -helps in rapid and inexpensive re-provisioning
of resources Basic Navigation

• Location Independence - resources can be accessed Logging-in

anywhere (except on limitations set by company's
Smartbooks User Interface
internal control)
 1. Header- contains the logo of Smartbooks and the ▪ Invoice orders directly with little or no additional input
name of the company.
2. Modules Menu / Main Menu- where navigation is ▪ Give the user information and options on inventory location
done
▪ Present a full analysis of outstanding balance and aging of
- arranges the functions of the individual process and
receivables
applications in a tree-like structure
- contains a list of all modules with their related ▪ Other features include: showing transactions settled at any
options. given month or outstanding transactions, calculating
discounts across a range of products, viewing sequence of
The features for this menu:
invoices, credit notes & receipts entered in the transaction
1. Are arranged accustomed to per user basis and need of inquiries & processing collection applied to specific invoice.
access.
Purchasing
2. May be inactive for unauthorized users and will not modify
▪ Covers complete procurement cycle from PO generation to
some of the transactions.
goods receiving
The following modules are the primary content of the system:
▪ Show comprehensive subsidiary ledger on supplier’s
Financials & Accounting account

▪ Generate different financial reports ▪ Show an aged listing of accounts payable balances

▪ Inquire about any account over any period ▪ Enable payment run to create payment transactions

▪ Post transactions automatically without undergoing a 3. User Info- displays the information of user’s profile
separate process (user name and ID, options to change password and
logout).
▪ Generate BIR Reports 4. Status Bar- extends along the entire lower edge of
the Smartbooks main window and contains various
▪ Other features include: producing journal narratives, posting fields.
journals to any number of periods, reversal of journal entries
The lower left-most portion of the status bar displays the
Inventory Management following type of messages:

▪ Maintain unlimited number of warehouses and stock - error message- appears on a red background
quantities and informs you that the procedure cannot
continue until corrective action is taken.
▪ Set selling prices, even for specific branched or individual
- information message- appears on a blue
customers
background and informs you about the issue.
▪ Manually maintain standard costs or automatically - confirmation message- appears on a green
determine weighted average costs background and confirms the successful
execution of a procedure.
▪ Other features include: allowing the invoicing, pricing and 5. System Date & Time- is the current time and date
costing of dummy service or stock that the Smartbooks system keeps track of so that
transactions will be recorded timely and accurately.
items without recording them, maintaining maximum and
6. Operation Modes in Smartbooks
minimum stock level quantities and unlimited user-defined
Field
field specific to each inventory category for additional
- Copy From
important information required to be stored item
- Preview
Sales & Distribution - First
- Previous
▪ Enter and maintain customer orders and reference back to - Next
the order numbers - Last
 - Add can arrange your customers/suppliers into groups for
- New analysis purposes.
- Update
7. Functions in a Form 2. General Tab This tab mainly contains information
1. Document Link This function is normally linked fields, such as telephone number, e-mail, password, as
with the master data and documents. Using it will well as default values for documents, such as the buyer
open the detailed information. or the sales employee. You can also specify in this tab
2. Selection List While entering data into a whether the customer/supplier is active or on hold for a
document, user can easily look-up for certain time period.
customer/supplier data, or item data using this
3. Contact Persons Tab Allows you to enter data for any
button, or simply place your cursor on the field
number of contact persons at the customer/supplier’s
which has SL button and then press Tab key.
company. The system displays the name of the person as
you define as the standard contact person on the General
8. Customize User Credentials
tab page.
Chapter 3: Master Data and Document Handling
4. Addresses Tab Contains the bill to address or several
Master Data is essential to getting the most out of pay to address, as well as several ship to address, which
Smartbooks. you can specify in the sales document. The delivery
address for Payable document is always the address of
These includes: your company.

✓ data describing business partners such as customers 5. Payment Terms Tab Contains payment data that is
and suppliers used by default in documents. The system takes most of
this payment data from the payment terms defined.
✓ descriptions of items that are kept in inventory or
manufactured by the company ✓ G/L accounts which 6. Payment System Tab Contains payment data that is
are used to post transactions used by the payment system

Types of Master Data 7. Accounting Tab Contains the Control Account and
optionally a reference to another master record for the
1. Customer - people and organizations to whom your customers/suppliers head office (consolidating BP). It
company sells products and services. Customer master also contains information on how taxes are handled.
data records are used as the foundation for documents
related to processing and fulfilling orders for customers Item Master Record
and for the wizard for dunning letters.
1. Header- comprises the Code, Name, Category and
2. Supplier Data- people and organizations from which Class for the item. This is the main information of the
your company buys products and services. Supplier item needed for the sales and purchasing process.
master data records are used to create documents
related to payable and accepting delivery of goods and 2. General Tab- contains permissions as to item visibility
services; and processing payment to suppliers. to Purchasing, Sales and Inventory module. This also
allows you to enter range of dates for the period of
3. Item Data- records that are used to create Sales items.
Orders, Purchase Orders, Bill of Materials, and other
documents which are necessary to move goods in and 3. Purchasing Tab - allows you to enter the quantity in
out of the company. payable units in the purchase order and modify the tax
group and rate at which an item is liable to tax when it is
Data Structure of Master Data purchased.

Customer/Supplier Master Record 4. Sales Tab - allows you to enter unit of measurement
and the item quantity per sales unit; also to enter tax
1. Header The header data comprises the Code, Type, group and rate at which an item is liable to tax when it is
Name and Business Style, as well as the Currency. You sold.
5. Inventory Tab- allows you to set G/L Accounts as per the seller will provide the buyer. When you enter a
item, the type of unit by which you manage the inventory purchase order, no value-based changes are posted in
and the costing method you will use. the accounting system. However, the order quantities are
listed in inventory management. You can view the
6. Price List Tab- allows you to set modification as the ordered quantities in various reports and windows, such
item’s price list, final price and/or price as per instalment. as the Inventory Status report and the Items window,
This information is important for optimizing ordering
Basic Features of a Marketing Document General
transactions and stockholding.
Document Structure
2. Receiving - a document created when you received
All the documents in the purchasing and sales process
the goods from a supplier. In most companies, the
share a similar structure. These documents are often
person in the storage location or the office
called and referred to as “Marketing Documents”. Much
responsible for taking delivery of shipments executes
of the data appearing in these tabs defaults from the
the receiving document. For services, the person for
master data. The values can be changed while working in
whom the services are rendered usually issues the
the documents. These changes will affect the document,
document. When you record a receiving document,
but do not change the master records. In general, the
Smartbooks receives the goods into the warehouse,
document is divided into:
updates the quantities and creates an accounting
1. The upper part (header) which contains general journal if you manage the perpetual inventory.
information. 3. Purchase Return Of course, there are always those
occasions when item received are found to be
2. The middle part is where all the specific information defective or not acceptable and must be returned to
about the ordered item or service is entered, such as the supplier. Since you can’t directly change or
item code, quantity, price, and line total. cancel a Receiving document, issue a Purchase
Return document to make the necessary
3. The lower part (footer) contains calculated totals for
adjustment.
the amount due, including discounts (if any), other
4. AP Voucher - purchasing document in Smartbooks
charges and tax.
that vouches for the invoice that the supplier sends
Chapter 4: Expenditure Cycle for items or services ordered and received. You can
create an AP Voucher from multiple purchase orders
Payable, also known as “Purchasing Process”, in the and receiving documents. You cannot change it since
process of making sure that a steady stream of required it is the legal accounting document that generates
materials is on the way to your company when and entries in the general ledger. The AP Voucher results
where you need them. As a fully integrated, end-to-end in a journal transaction that reflects an increase in
business management application, Smartbooks help you the company’s liability to the supplier and updates
run the Payable process, starting with the purchase the tax account and relevant expense accounts.
request and continuing with the rest of the Payable 5. Debit Memo Debit Memo - document used to
documents. reverse a part or entirely the inventory or accounting
transactions posted by an AP Voucher in the case
Smartbooks automatically captures information at each you return items later or realize you have made
step so you always know what’s on hand in inventory as mistakes while entering data in previous related
well as the up-to-the-minute financial state of a business. purchasing documents that have not been corrected.
The real-time view helps you identify potential shortages You create a Debit Memo if you want to make any
before they happen. adjustments to AP Voucher. However, you can also
create a debit memo without a base document.
Purchasing Documents and Reports
6. Payment After the AP Voucher has been sent to the
1. Purchase Order supplier, it’s time to actually pay the money owed
for the goods and/or services procured. This is done
Purchase Order is a commercial document issued by a through the Treasury Module.
buyer to a seller specifying the items (goods or materials)
or services- along with agreed quantities and price that Chapter 5: Revenue Cycle
 Sales Process moves from issuing a sales order to selling a seller that provides goods/services. The memo is
goods and services to delivering those goods to invoicing issued as a way to reduce the amount owed by the
the customer for their purchases. customer. The deduction is taken from an invoice
that was previously issued, which is the most
Sales Documents and Reports Sales Order common type of credit memorandum.*
*https://corporatefinanceinstitute.com/resources/k
1. Sales Order - commitment from a customer or lead
nowledge/finance/credit-memorandum/
to buy a product or service. The document serves as
6. Payment After the Invoice has been sent to the
a foundation for planning production purchase
customer, it’s time to actually collect the money
orders.
owed for the goods and/or services delivered. This is
Creating sales orders does not post value-related done through the Treasury Module
changes in the accounting system. However, if the sales
order is created for items, the ordered quantities are Chapter 6: Inventory Cycle
listed in Inventory Management as reserved for the Item Receipt An Item Receipt lets you increase the
customer. inventory level in situation that is not the direct
result of adding a Payable document.
This information is important for:
Item Issuance An Item Issuance lets you reduce the
✓ Optimizing ordering transactions and stockholding and
inventory level in a situation that is not direct results
✓ Ensuring that customer requirements are dealt with of a sales document entry.
quickly and satisfactorily
Item Transfer document is used to transfer
2. Shipment, also known as the Delivery document, is inventory from one Storage Location to another. An
a legally binding document indicating that the inventory transfer can also be carried out as a
delivery of goods or services has occurred. Without consignment for a customer. The items are then
this document, goods can be delivered only if an stored in the customer’s Storage Location and are
invoice has already been created. sold from here

When you create a shipment, the corresponding goods Batch and Serial Numbers
issue is also posted. The goods leave the warehouse and Batches are used to track groups of items with
the relevant stock changes are posted. When the stock is characteristics in common. These characteristics
changed, the values in the accounting system changes as might be attributes you define such as a shade of
well. color, granularity of PH balance. The characteristics
could be dates, such as expiration dates,
3. Sales Return
manufacturing dates, or the date the items were
For various reasons, customers sometimes return
received into inventory.
goods. In this case, you create a return document.

Serial numbers can help you track items down to

4. AR Invoice Invoice documents represents a legally-
the level of each individual object in your
binding document. When an invoice is received, the
warehouse, so you know exactly which one was sold
posting is made to the related customer accounts in
to a customer. The typical criteria for determining if
the accounting system. If a delivery did not precede
an item needs a serial number are: ➢ Is the item a
the invoice and you sell the warehouse items, stock
high value item? ➢ Should the item be tracked for
quantities are also updated accordingly when you
security or repair reasons?
issue the invoice. If you create an invoice without
reference to the delivery, the system automatically
Chapter 7: The Accounting Cycle
posts changes to the stock. In other words, if a
A. Journalizing
delivery already exists, errors can occur in inventory
journal is a record of financial transactions in
management because the delivery quantity is
order by date. A journal is often defined as the
posted twice in the system.
“book of original entry”. The definition was
5. Credit Memo A credit memorandum- often
more appropriate when transactions were
shortened to credit memo, is given to a customer by
written in a journal prior to manually posting Purchases Journal
them to the accounts in the general ledger or The purchases journal lists all credit purchases
subsidiary ledger. of merchandise. Entries in this journal usually
include the date of the entry, the name of the
General Journal is the master journal that all supplier, and the amount of the transaction.
company transactions or journal entries are
recorded in. A typical general journal has at Cash Disbursements Journal
least five columns: ✓ One for the date ✓ Cash disbursements occur in business when a
Account title ✓ Posting reference ✓ Debit company makes a payment. A number of
column ✓ Credit column different transactions can incur a cash
disbursement. Companies record these
Special journals are all accounting journals transactions, as every disbursement results in a
except for the general journal. These journals lower cash balance. Disbursements will either
are used to record specific types of high-volume result in a use or exchange of assets. Many
information that would otherwise be recorded companies report disbursements in a separate
in and overwhelm the general ledger. The total accounting journal.
amounts in these journals are periodically
transferred to the general ledger in summary Sales Journal
form. Transactions are recorded in special in The sales journal lists all credit sales made to
chronological order, making it easier to customers. Sales returns and cash sales are not
research transactions. Examples of special recorded in this journal. Entries in the sales
journals are: ✓ Purchases Journal ✓ Cash journal typically include the date, invoice
Disbursements Journal ✓ Sales Journal ✓ Cash number, customer name, and amount. Invoices
Receipts Journa are the source documents that provide this
information. In its most basic form, a sales
Document Structure journal has only one column for recording
Each purchasing document in Smartbooks has transaction amounts. Each entry increases
nearly identical header and footer areas and (debits) accounts receivable and increases
tabs named Details and Journal. This structure (credits) sales.
helps to ensure that all relevant data are
captured as the A/P Process initiated. Cash Receipts Journal
1. Header Area A cash receipts journal is a special record used
The upper area of a purchasing document. You in accounting, usually by retailers. It involves
enter supplier data and delivery dates here, if recording the details of sales in a specific
Smartbooks does not fill it in automatically as manner. In turn, the cash receipts journal
part of the process flow. gathers together the relevant information in a
2. Footer Area way that makes it easier to copy across, in
The lower area of a payable document and aggregate, to traditional doubleentry accounts.
contains the calculated totals for the purchase,
including tax. B. Ledger
3. Details tab A general ledger is the master set of accounts
The part where all the specific information that summarize all transactions occurring within
about the ordered items or services entered an entity. There may be a subsidiary set of
such as quantity, price, item number and item ledgers that summarize into the general ledger.
name. The general ledger, in turn, is used to aggregate
4. Journal tab information into the financial statements of a
Contains the relevant general ledger (G/L) business; this can be done automatically with
account information for the purchase pulled accounting software.* The general ledger
from the contains a debit and credit entry for every
financial accounting master data transaction recorded within it, so that the total
of all debit balances in the general ledger
 should always match the total of all credit 1. the general ledger account balances prior to
balances. If they do not match, the general their proposed adjustments;
ledger is said to be “out of balance” and must 2. their proposed adjustments, and
be corrected before reliable financial 3. all of the account balances after the
statements can be compiled from it.* proposed adjustments.
These final balances are known as the adjusted
A subsidiary ledger stored the details for a trial balance, and these amounts will be used in
general ledger control account. Once the
information has been recorded in a subsidiary organization's financial statements.
ledger, it is periodically summarized and posted
to a control account in the general ledger, D. Adjusting entries
which in turn is used to construct the financial are journal entries made at the end of an
statements of a company. Most accounts in the accounting cycle to update certain
general ledger are “not” control accounts; revenue and expense accounts and to make
instead, individual transactions are recorded sure you comply with the matching principle.
directly into them. Subsidiary ledgers are used The matching principle states that expenses
when there is a large amount of transaction have to be matched to the accounting period in
information that would clutter up the general which
ledger. This situation typically arises in the revenue paying for them is earned. There
companies with significant sales volume. Thus, are four main types of accounts that need to be
there is no need for a subsidiary ledger in a adjusted: prepaid expenses, accrued expenses,
small company.* unearned revenues, and accrued revenues.
The two major types of adjusting entries are:
C. Trial Balance a. Accruals are for revenues and expenses that
A trial balance is a bookkeeping or accounting are matched to dates before the transaction
report that lists the balances in each of an has been
organization's general ledger accounts. recorded.
(Accounts with zero balances will likely be b. Deferrals are for revenues and expenses that
omitted.) The debit balance amounts are listed are matched to dates after the transaction has
in a column with the heading "Debit balances" been
and the credit balance amounts are listed in recorded.
another column with the heading "Credit
balances." The total of each of these two Accruals are adjustments for 1) revenues that
columns should be identical. have been earned but are not yet recorded in
the accounts, and 2) expenses that have been
In a manual system a trial balance was incurred but are not yet recorded in the
commonly prepared by the bookkeeper in order accounts. The
to discover accruals need to be added via adjusting entries
whether math errors and/or some posting so that the financial statements report these
errors were made. Today, bookkeeping and amounts.
accounting Some accrued items for which adjusting entries
software has eliminated those clerical errors. may be made include:
This means that the trial balance is less • Salaries
important for • Past-due expenses
bookkeeping purposes since it is almost certain • Income tax expenses
that the total of the debit and credit columns • Interest income
will be • Unbilled revenue
equal.
However, the trial balance continues to be Deferrals
useful for auditors and accountants who wish to In accounting, this means to defer or to delay
show recognizing certain revenues or expenses on
the income statement until a later, more incurred during the period to arrive at a net
appropriate time. Revenues are deferred to a profit or loss. This is usually considered the
balance sheet most important
liability account until they are earned in a later financial statement, since it describes
period. When the revenues are earned they will performance.
be Statement of Cash Flows
moved from the balance sheet account to This report reveals the cash inflows and
revenues on the income statement. outflows experienced by an organization during
Some deferred items for which adjusting entries the reporting
would be made include: period. These cash flows are broken down into
➢ Prepaid insurance three classifications: operating activities,
➢ Prepaid rent investing
➢ Office supplies activities, and financing activities. This
➢ Depreciation document can be difficult to assemble and so is
➢ Unearned revenue more commonly
issued only to outside parties.
E. Financial Statements Statement of Changes in Equity
Financial Statements are reports that This report documents all changes in equity
summarize important financial accounting during the reporting period. These changes
information about your include the
business. There are three main types of issuance or purchase of shares, dividends issued
financial statement: the balance sheet, profit and profits/losses. This document is not usually
and loss included when the financial statements are
statement, and cash flow statement. issued internally, as the information in it is not
Together they give you and outside people like overly useful
investors, a clear picture of your company’s to the management team.
financial
position.* F. Closing Entries: Period-End Closing
Types of Financial Statement A closing entry is a journal entry made at the
Balance Sheet end of an accounting period to transfer
A balance sheet shows the financial position of balances from a
a business as of the report date (so it covers a temporary account to a permanent account.
specific Companies use closing entries to reset the
point in time). The information is aggregated balances of temporary accounts—accounts that
into the general classifications of assets, show balances
liabilities and over a single accounting period—to zero. By
capital/equity. Line items within the asset and doing so, the company moves these balances
liability classification are presented in their into permanent
order of accounts on the balance sheet. These
liquidity, so that the most liquid items are permanent accounts show a company’s long-
stated first. This is a key document, and so is standing financials.*
included in most Temporary Accounts vs. Permanent Accounts
issuances of financial statements. Temporary Accounts
Profit and Loss Statement Temporary accounts are accounts in the general
Also known as Income Statement, a profit and ledger that are used to accumulate transactions
loss statement reveals the financial over a
performance of an single accounting period. The balances of these
organization for the entire reporting period. It accounts are eventually used to construct the
begins with sales, and then subtracts out all income
expenses statement at the end of the fiscal year.
When the income statement is published at the
end of the year, the balances of these accounts
are
transferred to the income summary, which is
also a temporary account.
The income summary is used to transfer the
balances of temporary accounts to
capital/retained earnings,
which is a permanent account on the balance
sheet.©
Permanent Accounts
Permanent Accounts are accounts that show
the long-standing financial position of a
company. Balance
sheet accounts are permanent accounts. These
accounts carry forward their balances
throughout multiple
accounting periods.©

G. Journal Entry List