ACCT321ACCOUNTING INFORMATION SYSTEMModule 2Systems, Roles.docx

ACCT321
ACCOUNTING INFORMATION SYSTEM
Module 2
Systems, Roles, And Development Methodologies
YANBU UNIVERSITY COLLEGE
Management Science Department
© Yanbu University College
1
Learning Objectives
Describe the four major steps in the data processing cycle.
Describe the major activities in each cycle.
Describe documents and procedures used to collected and
process data.
Describe the ways information is stored in computer-based
information systems.
Discuss the types of information that an AIS can provide.
Discuss how organizations use ERP systems to process
transactions and provide information.
2-2

Data processing cycle (chapter 2)
Enterprise Resource Planning (ERP) (chapter 2)
Prepare and use data flow diagram (DFD) in the accounting
information system (chapter 3)
Prepare and use flow chart in the information system (chapter 3)
Data hierarchy diagram (chapter 4)
Database terminology (chapter 4)
Relational database (chapter 4)
Outline
Slide 3
Data Processing Cycle
2-4
Input
Process
Output
Storage
The Data Processing Cycle Determines
What data is stored?

Who has access to the data?
How is the data organized?
How can unanticipated information needs be met?
2-5
Data Input—Capture
As a business activity occurs data is collected about:
Each activity of interest
The resources affected
The people who are participating
For example for sales transaction the following data will be
collected:
Customer name and details, date, item sold, employee who make
the sale, prices and delivery instruction.
2-6
Paper-Based Source Documents
Data are collected on source documents
E.g., a sales-order form
The data from paper-based will eventually need to be
transferred to the AIS
Turnaround
Usually paper-based
Are sent from organization to customer
Same document is returned by customer to organization
2-7

Cust.
Org.
Turnaround Document
Source Data Automaton
Source data is captured
In machine-readable form
At the time of the business activity
E.g., ATM’s; POS
2-8
Data Input—Accuracy and Control
Well-designed source documents can ensure that data captured
is
Accurate
Provide instructions and prompts
Check boxes
Drop-down boxes
Complete
Internal control support
Prenumbered documents
2-9
Data Storage

Types of AIS storage:
Paper-based
Ledgers
Journals
Computer-based storage
An entity is something about which information is stored such
as employees, employees, inventory item and customer
2-10
Ledgers
General
Summary level data for each:
Asset, liability, equity, revenue, and expense
Subsidiary
Detailed data for a General Ledger (Control) Account that has
individual sub-accounts
Accounts Receivable
Accounts Payable
2-11
A/R
$1000
Joe Smith $250
Patti Jones $750

A/P
$600
ACME Inc.$150
Jones, Inc $350
Journals
General
Infrequent or specialized transactions
Specialized
Repetitive transactions
E.g., sales transactions
2-12
Coding Techniques
Sequence
Items numbered consecutively
Block
Specific range of numbers are associated with a category
10000–199999 = Electric Range

Group
Positioning of digits in code provide meaning
Mnemonic
Letters and numbers
Easy to memorize
Code derived from description of item
Chart of accounts
Type of block coding
2-13Digit PositionMeaning1–2Product Line, size, and so
on3Color4–5Year of Manufacture6–7Optional
Features124100012 = Dishwasher
4 = White
10 = 2010
00 = No Options
Computer Based Storage
Entity
Person, place, or thing (Noun)
Something an organization wishes to store data about
Attributes
Facts about the entity
Fields
Where attributes are stored
Records
Group of related attributes about an entity
File
Group of related Records
2-14

File Types
Transaction
Contains records of a business from a specific period of time
Master
Permanent records
Updated by transaction with the transaction file
Database
Set of interrelated files
2-14
Transaction File
Master before Update
Updated Master File
Data Processing
Four Main Activities
Create new records
Read existing records
Update existing records

Delete records or data from records
2-16
Data Output Types
Soft copy
Displayed on a screen
Hard copy
Printed on paper
2-17
ERP Systems
2-18
Enterprise Resource Planning (ERP)
Integrate an organization’s information into one overall AIS
ERP modules:
Financial
Human resources and payroll
Order to cash
Purchase to pay
Manufacturing
Project management
Customer relationship management

System tools
2-19
ERP Advantages
Integration of an organization’s data and financial information
Data is captured once and can be used many time
Greater management visibility, increased monitoring
Better access controls to designated employees
Standardizes business operating procedures
Improved customer service
More efficient manufacturing
2-20
ERP Disadvantages
High cost
Time-consuming to implement
Changes to an organization’s existing business processes can be
disruptive
Complex
Some employees can be resistance to change
2-21
Module 2 - Chapter 3
Systems Documentation Techniques

3-22
Learning Objectives
Prepare and use data flow diagrams to understand, evaluate, and
document information systems.
Prepare and use flowcharts to understand, evaluate, and
document information systems.
3-23
What Is Documentation?
Set of documents and models
Narratives, data flow models, flowcharts
Describe who, what, why, when, and where of systems:
Input, process, storage, output, and controls
3-24
Why Should You Learn Documentation?
You need to be able to read documentation in all its forms:
narratives, diagrams, models.
You need to be able to evaluate the quality of systems, such as
internal control based in part on documentation.
SAS 94 requires independent auditors to understand all internal
control procedures.
Documentation assists in auditor understanding and

documentation of their understanding
Sarbanes-Oxley states that management:
Is responsible for internal control system
Is responsible for assessing the effectiveness of the IC System
Both management and external auditors need to document and
test IC System
3-25
Data Flow Diagrams
Graphically describes the flow of data within a system
Four basic elements
3-26
Entity
Process
Data Flow
Data Store
Entity
Represents a source of data or input into the system
or
Represents a destination of data or output from the system
3-27

Data Flows
Movement of data among:
Entities (sources or destinations)
Processes
Data stores
Label should describe the information moving
3-28
Process
Represents the transformation of data
Represents data at rest
3-29
Data Store
Data Flow Diagram Levels
Context
Highest level (most general)
Purpose: show inputs and outputs into system
Characteristics: one process symbol only, no data stores
Level-0
Purpose: show all major activity steps of a system
Characteristics: processes are labeled 1.0, 2.0, and so on

3-30
DFD Creation Guidelines
Understand the system
Ignore certain aspects of the system
Determine system boundaries
Develop a context DFD
Identify data flows
Group data flows
Number each process
Identify transformational processes
Group transformational processes
Identify all data stores
Identify all sources and destinations
Label all DFD elements
Subdivide DFD
3-31
Flowcharts
Use symbols to logically depict transaction processing and the
flow of data through a system.
Using a pictorial representation is easier to understand and
explain versus a detailed narrative.
3-32

Flowchart Symbol Categories
Input/Output
Processing
Storage
Miscellaneous
3-33
Flow Chart Symbol Categories
(cont’d)
Types of Flowcharts
Document
Illustrates the flow of documents through an organization
Useful for analyzing internal control procedures
System
Logical representation of system inputs, processes, and outputs
Useful in systems analysis and design
Program
Represent the logical sequence of program logic
3-35

Document Flowchart
3-36
Document Flowchart (cont’d)
3-37
System Flowchart
3-38
Program Flowchart
3-39
Module 2 - Chapter 4
Relational Databases
4-40

Learning Objectives
Explain the importance and advantages of databases.
Describe the difference between database systems and file-
based legacy systems.
Explain the difference between logical and physical views of a
database.
Explain fundamental concepts of database systems such as
DBMS, schemas, the data dictionary, and DBMS languages.
Describe what a relational database is and how it organizes
data.
4-41
Data Hierarchy
Field
Attributes about an entity
Record
Related group of fields
File
Related group of records
Database
Related group of files
4-42

Advantages of Database Systems
Data Integration
Files are logically combined and made accessible to various
systems.
Data Sharing
With data in one place it is more easily accessed by authorized
users.
Minimizing Data Redundancy and Data Inconsistency
Eliminates the same data being stored in multiple files, thus
reducing inconsistency in multiple versions of the same data.
Data Independence
Data is separate from the programs that access it. Changes can
be made to the data without necessitating a change in the
programs and vice versa.
Cross-Functional Analysis
Relationships between data from various organizational
departments can be more easily combined.
4-43
Database Terminology
Database Management System (DBMS)
Interface between software applications and the data in files.
Database Administrator (DBA)
Person responsible for maintaining the database
Data Dictionary
Information about the structure of the database
Field names, descriptions, uses
4-44

Logical vs. Physical
Physical View
Depends on explicitly knowing:
How is the data actually arranged in a file
Where is the data stored on the computer
Logical View
A Schema separates storage of data from use of the data
Unnecessary to explicitly know how and where data is stored.
Copyright © 2012 Pearson Education, Inc. publishing as
Prentice Hall
4-45
Schemas
Describe the logical structure of a database
Conceptual Level
Organization wide view of the data
External Level
Individual users view of the data
Each view is a subschema
Internal Level
Describes how data are stored and accessed
Description of: records, definitions, addresses, and indexes
Copyright © 2012 Pearson Education, Inc. publishing as
Prentice Hall
4-46

DBMS Languages
Data Definition Language (DDL)
Builds the data dictionary
Creates the database
Describes the subschema
Specifies record or field security constraints
Data Manipulation Language (DML)
Changes the content in the database
Updates, insertions, and deletions
Data Query Language (DQL)
Enables the retrieval, sorting, and display of data from the
database
4-47
Relational Database
Relational data model represents the conceptual and external
level schemas as if data are stored in tables.
Table
Each row, a tuple, contains data about one instance of an entity.
This is equivalent to a record
Each column contains data about one attribute of an entity.
This is equivalent to a field
4-48
A Relational Table
4-49

Row (Record)
Column (Field)
Each row contains multiple attributes describing an instance of
the entity. In this case, inventory.
Same type of data
Attributes
Primary Key
An attribute or combination of attributes that can be used to
uniquely identify a specific row (record) in a table.
Foreign Key
An attribute in one table that is a primary key in another table.
Used to link the two tables
4-50
Database Design Errors
If database is not designed properly data errors can occur.
Update Anomaly
Changes to existing data are not correctly recorded.
Due to multiple records with the same data attributes
Insert Anomaly
Unable to add a record to the database.
Delete Anomaly
Removing a record also removes unintended data from the
database.

4-51
Data processing cycle (chapter 2)
Enterprise Resource Planning (ERP) (chapter 2)
Prepare and use data flow diagram (DFD) in the accounting
information system (chapter 3)
Prepare and use flow chart in the information system (chapter 3)
Data hierarchy diagram (chapter 4)
Database terminology (chapter 4)
Relational database (chapter 4)
Summary
Slide 52
Slide 53
END OF LECTURE
YANBU UNIVERSITY COLLEGE
MANAGEMENT SCIENCE DEPARTMENT
ACCOUNTING INFORMATION SYSTEM

ACCT 322
SEMESTER 151
ASSIGNMENT I
Name & ID:
________________________________________Section:
______
Due date: Week 7(Thursday)
Objectives:
CLO
PLO
Total marks
Marks awarded
2
AS 2
30
TOTAL MARK AWARDED
Categories
60 - 69%
(Level 1)
70-79%
(Level 2)
80 -89%
(Level 3)
90-100%
(Level 4)
Application (AS 2)
1. Application – Prepare the context diagram and level 0
diagram

Less than half of the diagrams are correct
Half of the diagram are correct
Three quarter of the diagram are correct
All of the diagram are correct
Application (AS 2)
2. Application – Prepare the document flow chart
Less than half of the flowcharts are correct
Half of the flowcharts are correct
Three quarter of the flowcharts are correct
All of the flowcharts are correct

QUESTION 1
XYZ Company processes its sales and cash receipt document
based on
1. Payment on account
Each morning the mail clerk in the sales department opens the
mail and prepares a remittance advice (showing customer and
amount paid) if one is not received. The checks and remittance
advices are forwarded to the sales department supervisor, who
will review each check and forwards each checks and remittance
advices to accounting department supervisor
The accounting department supervisor, who also functions as
credit manager (approving new credit and credit limit), reviews
all checks for payment on past-due account. She forward the
checks and remittance advice to account receivable clerk, who
arrange the advices in alphabetical order. The remittance
advices are posted directly to the account receivable ledger. The
checks are endorsed and the total is posted to the cash receipt
journal. The remittance advice are filed chronological order
logically. After receiving the cash from the previous day cash
sales, the account receivable clerk prepare the daily deposit slip
in three copies. The second copy of the deposit slip will
accompany the bank slip and the third copy will filed by date.
2. Sales
Sales clerks prepare sales invoice in three copies. The original
and the second copies are presented to the cashier. The sales
clerk retain the third copy in the sales book. When a sale is on
cash, the customer pays the sales clerk, who give the money to
the cashier with the invoice copies
The cashier approve the credit sale from an approved credit list

after the sales clerks prepares the three part invoice. After
receiving cash or approving the invoice, the cashier validate the
original copy of the sales invoice and give it to the customer. At
the end of each day, the cashier recaps the sales and cash
received and forward the cash and second copy of the sales
invoice to the account receivable clerk.
The account receivable clerk balance the cash received with
cash sales invoice and prepare daily sales summary. The sales
invoice is posted to the account receivable ledger and then all
invoices are sent to the inventory control clerk in sales
department for posting the inventory control card. The
inventory clerk files the invoices numerically. The accounts
receivable clerk posts the daily sales summary to the cash
receipt and sales journal and files the sales by date.
The cash from cash sales is combined with the cash received on
account to make up the daily bank deposit.
3. Bank deposit
The bank validate the deposit slip and return the second copy to
the accounting department, where the account receivable clerk
files it by date. Monthly bank statement are reconciled promptly
by the accounting department supervisor and filed by date
Required:
a) Prepare context diagram and level 0 DFD for ABC sales and
cash receipt transaction
b) Prepare document flowchart to document the sales and cash
receipt transaction

Your answer must be type and printed out. You need to use the
New Times Roman and the fond is 12.
Page 2

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