Riordan Manufacturing – Accounting Cycle Description

Riordan Manufacturing – Accounting Cycle Description

Introduction
Riordan Manufacturing, Inc. is an industry leader in the field of plastic injection molding. Using cutting edge art design capabilities, this Fortune 1000 Enterprise Company maintains facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, and has annual earnings of $46 million. A company does not attain and maintain this type of success by accident. Part of Riordan’s success is due to its conversion accounting cycle. This paper will initially identify the five accounting cycles and explain how Riordan uses the conversion accounting cycle. Next, the strengths and weaknesses of the internal controls related to the conversion cycle will be examined. Additionally, how the conversion cycle would be integrated into an enterprise-wide accounting information system will be explained. Next, the various types of information systems that will be needed to achieve this integration will be compared and contrasted. Finally, how accounting information flows through Riordan organization will be discussed.
The Five Cycles
The flow of information is extremely important in business when an organization uses an accounting information system. Information that is accumulated can be segregated into cycles. According to Loflin, the five cycles a business may use are the revenue cycle, the expenditure cycle, the financing cycle, the fixed asset cycle, and the conversion cycle (2008).
In each of these cycles many transactions are effected. First, the revenue cycle encompasses transactions in sales, accounts receivable and cash payments. The areas that may be affected are customer orders, invoices and deposit slips. Second, the expenditure cycle involves transactions, which are needed to acquire material and overhead for the conversion process of the organization.
Some areas involved in the expenditure cycle are requesting inventory, receiving inventory, and recording payment for...