E-COMMERCE - University of Washington



E-COMMERCE

Use of advances in networking and communications technology to improve the ways in which a company interacts with its suppliers and customers.

E-commerce has become a basic requirement for businesses.

E-commerce has two basic types of transactions:

(1) B-to-C; relatively simple, involve the issue of trust.

(2) B-to-B; complex, large volume, issues are accountability and control.

EDI (Electronic Data Interchange): electronic exchange of data between trading partners.

EDI—

• reduces inventory,

• streamlines business processes,

• eliminates paper, and

• improves flow of information.

EDI effectiveness depends on the degree of its integration with company’s AIS.

EFT (Electronic Funds Transfer): making cash payments electronically.

• Accomplished though banking system’s Automated Clearing House network.

• Remittance data may/may not be transmitted with payment depending on the EDI capabilities of company’s bank.

• FEDI (Financial Electronic Data Interchange): integrates EFT and EDI, remittance data and funds transfer instruction processed as one package.

• Financial value-added networks offered by independent organizations can also be used to integrate EFT & EDI.

E-commerce’s impact of business processes:

• every step in the value chain is greatly affected.

• reduces staffing levels, improve service & support, cost savings, improve both the efficiency and effectiveness of support activities.

• e-commerce made possible by advances in networking and communications technology.

ACCOUNTING ISSUES in E-COMMERCE

Many nontraditional assets are being created: e.g., issues about sales of digitized assets and computation of CoGS.

Taxation of goods/services sold over the internet creates some complex and interesting issues since the transaction occurs simultaneously in various states/countries among various parties. Who gets the tax? and How much tax?

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