(1) Physical component (the acquisition of       
          goods or services),
      (2) Financial component (the cash disbursement
           to the suppliers)

Conversion cylce

      (1)Production system - Planning, 
         scheduling, and control of the physical 
         product through the manufacturing process

      (2)Cost accounting system – Monitors the
          flow of cost information including labour,
          overhead and raw materials related to
          production.

Revenue cycle

      (1)Sales order processing – Majority of 
          business sales are made on credit and 
          involve tasks such as preparing sales  
          orders, billing customers and recording the 
          transaction in the accounts

      (2)Cash receipts – Includes collecting cash 
          and depositing cash into bank.

AP clerk reviews and open the AP file for items due for payment as to ensure that debts are paid on the last possible date without missing due dates and losing accounts. The clerk sends payment approval in the form of AP packet to the cash disbursements department.

2. Prepare cash disbursement and update AP record
The cash disbursement clerk reviews the documents for completeness and clerical accuracy. The clerk prepares check and records the check number as well as the dollar amount in the check register/cash disbursement journal. The AP clerk also removes the liability and the AP packet is then filed in the closed AP file. An account summary is prepared and sent to the general ledger function.

3. Post to general ledger
The general ledger function receives the journal voucher from cash disbursements and the AP account summary from account payable. The numbers are reconciled with the AP summary, and the AP control and cash accounts in the general ledger are updated accordingly.