Chapter 1

1

Chapter 1

Introduction to Accounting Information

Systems

Chapter 4

Database

Management

Systems

Learning Objectives

• Understand major approaches used to process data re accounting/business events

• Identify major accounting cycles

• Recognize complexities/limitations of traditional data management approaches

• Appreciate advantages of database approach to data management

• Understand basic processes of database design and implementation

3

Business Event Cycles (Merchandising)

• Revenue

– Capture & record customer orders

– Ship goods - record CGS

– Send invoice - record Sales & A/R

– Collect and record cash receipts

4

Business Event Cycles (Merchandising) (2)

• Expenditures

– Prepare and record purchase orders

– Receive goods and record cost of inventory

– Receive vendor invoices; record Accts Payable

– Prepare paychecks & record payroll activities

– Prepare/record cash disbursements

5

Order EntryProcess

Billing/AR/ReceiptsProcess

Inventory

GeneralLedger

REVENUECYCLE

EXPENDITURECYCLE

Business Even Cycles (merchandising)

Purchasing/AP/Disbursement

Process

6

B/AR/CRProcess

Generalledger

P/AP/CDProcess

Service FirmRevenue Cycle

7

IntegratedProduction

Process

Generalledger

P/AP/CDProcess

ProductionCycle

8

Event-Driven Approach

• Raw data captured as events occur

• Minimum data to be collected/stored

– Who, What, When, Where

• Data can be aggregated to meet user requirements

9

Customernumber

Customername

Customeraddress

Creditlimit

Sales-person

Salesterritory

Year-to-datesales

RECORD

Fields Characters

10

Start

New customerform

Review &approve

Enter customerdata

Inputaccepted

New customerform

Completedforms

Credit Department Computer

Createcustomer

record

Customermaster

data

Add customerrecord

11

Start

New customerform

Review &approve

Enter customerdata

Inputaccepted

New customerform

Completedforms

Credit Department Computer

Edit order,record order,

updateinventory, print

shippingdocuments

Inventorymaster

data

Customermaster

data

Sales ordermaster

data

Warehouse

Packing slip

Pickingticket

Shipping

Enter customer order

12

Data coding

• Sequential (serial)– Student ID

numbers

– “Wait” ticket at Post Office

• Example based on employee ID codes:– 001 - 1st hired

– 002 - 2nd hired

– etc

• Block– Universal product code

– 73805 80248

Mfg.code

ProductI.D.

Example based on employee ID codes:

- 001-100 - fab dept.- 101-200 - assembly dept

13

Data coding (2)Significant digit

16 2 17 4389

Productgroup

Part orsubassembly

Warehouse Unique itemidentifier

Example based on employee ID codes

Inventory item

2 0 4 623

Workcenter

Exempt or nonexempt

Pay ratecode

Uniqueemployeeidentifier

14

Data coding (3)

Hierarchical Postal zip code

0 18 90Section ofcountry

Region within section

Locality (townwithin region)

Example based on employee ID codes

01 3 9 623Companydivision

Plant Department Uniqueemployer ID

15

Data coding (4)

Mnemonic College course numbering:

AC340 - Accounting Information Systems

EN101 - English Composition

Example Based on Employee ID Codes:

F M C 623

Female Married Caucasian Uniqueemployee ID

16

Application approach to data management

Enter InventoryTransaction

InventoryApplicationPrograms

InventoryOutput

Salesorder

master data

Inventorymaster data

17

Record layouts - applications approach

Sales order #

Customer#

Item # PriceSales

PersonQuantityOrdererd

sales order record layout

Item # Unit costWarehouselocation#

Quantityordered

Salesorder #

Customer#

inventory record layout

Customer#

Customername

Creditlimit

SalesPerson

Quantityordered

Salesorder #

customer record layout = key field

18

Database approach

• Decouples data from applications

• Data are independent

• Database shared by applications

• Data can be easily accessed by

– Report generators

– Query programs

• Must use DBMS + Operating system

19

Data base approach to data management

Enter salestransaction

Enter inventorytransaction

Salesapplicationprograms

Inventoryapplications

programs

Data basemanagement

systemsoftware

Operatingsystem

Reportwriter

program

QueryProgram

Reportrequest

Query

Onlinequery

response

Report

Database

20

DBMS

• Set of integrated programs designed to simplify tasks of creating, accessing, managing databases

• Functions– defining data– defining relations among data– interfacing with operating system– mapping each user’s view of data – (subschema schema)

21

Schema/Subschema

Customer#

Customername

Creditlimit

SalesPerson

Customeraddress

YTDSALES

SCHEMA

Customer#

Customername

SalesPerson

YTDSALES

SALES MANAGER SUBSCHEMA

Customer#

Customername

Creditlimit

CREDIT MANAGER SUBSCHEMA

22

Advantages of Database Approach

• Nonredundant data

• Ease of maintenance

• Reduced storage costs

• Data integrity

• Shareability/flexibility

• Privacy

23

Disadvantages of Database Approach

• High hardware/software cost

• Need for database administrator

• High concentration of applications on database

• Contention problems

• Training

24

ORDER

CUSTOMER SALE

INVENTORY

madeto

receivedfrom

lineitem

lineitem

fills

Entity-relationship diagram

25

Specify Logical DB Design

• Select Logical DB model

• Transform Data Model using a Logical DB model

• Select DBMS

• Implement DBMS

Learning Objectives

• Understand major approaches used to process data re accounting/business events

• Identify major accounting cycles

• Recognize complexities/limitations of traditional data management approaches

• Appreciate advantages of database approach to data management

• Understand basic processes of database design and implementation