Data Flow Diagram Representation of Accounting Systems

1. Business Software
Packages

2. Accounting Software
Information System

3. Data Processing (DP) is the manipulation or transformation of such
symbols as numbers and letters for the purpose of increasing their
usefulness.
Transaction Processing (TP), is data processing applied in business
data.
The two terms can be used interchangeably.
What is Data Processing?

4. A firm’s data processing tasks are performed
by an accounting information system (AIS)
that gathers data describing the firm’s
activities, transforms the data into
information and makes the information
available to users both inside and outside the
firm.
Accounting Information System

6. The AIS performs four basic data processing tasks:
1. Data Gathering
2. Data Manipulation
3. Data Storage
4. Document Preparation
Data Processing Tasks

7. As the firm provides products and services to its environment, each
action is described by a data record. When the action involves an
environmental element, it is called a transaction, hence the term
transaction processing.
The data processing system gathers the data that describe each of the
firm’s internal actions and its environmental transactions.
Data Gathering

8. It is necesarry to manipulate the data to transform it into
information. Data manipulation operations include:
1. Classifying
2. Sorting
3. Calculating
4. Summarizing
Data Manipulation

9. In a small firm there can be hundreds of transactions and actions each
day; in a large firm there are thousands.
Each transaction is described by several data elements. All of this
data must be kept somewhere until it is needed., and that is the
purpose of data storage.
Data Storage

10. The AIS produces outputs for individuals and organizations both inside
and outside the firm. The output is triggered in two ways:
• By an action
Outputs are produced when something happens. An example
is the bill that is prepared each time a customer order is filled.
• By a time schedule
Outputs are produced at a particular time. An example is a
payroll check that is prepared each Friday.
Document Preparation

11. There are several characteristics of data processing that clearly
distinguish the AIS from other Computer Based Information
Systems:
1. Performs necessary tasks
2. Adheres to relatively standardized procedures
3. Handles detailed data
4. Has a primarily historical focus
5. Provides minimal problem-solving information
Characteristics of the AIS

12. A good example of an AIS is the one that is used by
distribution firms – firms that distribute products or
services to their customers.
We call the system the distribution system.
We will use data flow diagrams, or DFDs, to document the
system.
A Sample Accounting Information System

13. Major Subsystems of the Distribution
System
1. Systems That Fill Customer Orders
2. Systems That Order Replenishment Stock
3. Systems That Perform General Ledger Processes

14. Distribution
System
Customers
Suppliers
Management
Materials
Stockroom
System Overview
Sales Orders
Rejected Sales
order notices
Invoices
Statements
Payments by customers
Commitments
Purchase Orders
Shipments
Supplier invoices
Supplier statements
Payments to suppliers
Stock
Income Statement
Balance Sheet
Budget Reports
Other reports

15. 1.
Fill
Orders
Customers
Suppliers
Management
Materials
Stockroom
3.
Maintain
General
Ledger
2.
Order
Replenis
hment
Stock
Sales Orders
Rejected Sales Order
Notices
Invoices
Payments by customers
Statements
Receivables
ledger data
Inventory
ledger data
Payables
ledger data
Balance SheetIncome
Statement
Stock
Payments to suppliers
Supplier statements
Supplier invoices
Shipments
Purchase Orders
Commitments
Purchasing Data
Received Items
Other reports
Budget
reports

16. Four main systems that are involved in filling customer orders:
1. Order Entry System – enters customer orders into the system
2. Inventory System – maintains the inventory records
3. Billing System – prepares the customer invoices
4. Accounts Receivable System – collects the money from customers
Systems that Fill Customer Orders

17. 1.1
Enter
Orders
Customers
1.2
Process
Inven-
tory
Accepted Orders
1.3
Process
Billing
Sales Orders
Rejected sales orders notices
Completed
Orders
Filled
items
Purchasing
Data
2
23
Received
Items
Inventory
Ledger Data
1.4
Process
Accounts
Receivable
Billed
Orders
3
Receivables
ledger data
Invoices
Statements
Payments
by
Customers

18. Systems That Order Replenishment Stock
This system is concerned with ordering replenishment stock from
suppliers. It is consists of two subsystems:
1. Purchasing System – issues purchase orders to suppliers for the
needed stock
2. Receiving System – receives the stock
3. Accounts Payable System – makes payment to suppliers

19. Suppliers
Materials
Stockroom
2.1
Purchas
e Orders
2.3
Process
Accounts
Payable
2.2
Receive
Ship-
ments
1
Purchasing data
Purchase Orders
Commitments
Stock
Shipments
Issued Purchase
Order Data
Filled Purchase
Orders
Incurred Obligations
Supplier
Invoices
Supplier Statements
Payment to Suppliers
3
Received Purchases
1
Received Items

20. Systems That Perform General Ledger
Processes
The general ledger system is the accounting system that combines
data from other accounting systems for the purpose of presenting a
composite financial picture of the firm’s operations.
Two subsystems are involved:
1. General Ledger Update Subsystem
- posts the records tthat describe the various actions and
transactions to the general ledger
2. Report Preparation Subsystem
- uses the contents of the general ledger to prepare manager’s
reports.

21. 3.1
Update
General
Ledger
3.2
Prepare
Mngt
Reports
1 Receivables ledger data
1
2
Inventory ledger data
Payables ledger data
3.3 General Ledger
General ledger records
Updated general ledger record
Management report data
Management
Other reports
Budget reports
Balance Sheet
Income Statement

22. 1.1.1
Edit
Order
Data
1.1.2
Compute
Credit
Check
1.1.5 Sales Order Edit Rejects
1.1.3
Log in
Orders
1.1.4
Mark
filled
orders
1.1.6 Customer Credit File
Customers
Sales Orders Edit Rejects
Rejected Sales
Order Notices
Accepted
Orders
Edited
Orders
Credit Data
Edited and checked orders
1.2
1.1.8 Order Log
1.1.7 Sales Order Credit Rejects
Credit Rejects
1.3
Completed
Orders
Order Data
Date Filled