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Accounting Information Systems:Accounting Information Systems: A Business Process Approach A Business Process Approach

Chapter Five: Understanding and Chapter Five: Understanding and Designing Accounting DataDesigning Accounting Data

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Learning Objective

After completing this chapter, you should understand:

Attributes, primary keys, and foreign keysRelationship cardinalities (one-to-one, one-

to-many, and many-to-many)

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Learning Objective (Continue)

After completing this chapter, you should able to: Identify transaction and master tables in an AIS

databaseAssign keys to relate tables for use an application Identify relationship cardinalities in a business

processUse event analysis to design tables and attributes

for a database, and use a UML class diagram to document your design.

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Exhibits: Exhibits: 5.2, 5.45.2, 5.4

Tables: Tables: 5.1, 5.25.1, 5.2

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Exhibit 5.2  Outline of Steps in Developing a UML Class Diagram

Four basic steps need to be taken to create a UML class diagram.

Step 1: Place the required transaction tables (files) on the UML class diagram. Accomplish this step by doing the following:

Identify events in a business process. Use the procedures described in Chapter 2. Decide which events will need transaction tables. Exclude events that do not need to be recorded in the computer system and exclude query, reporting, and maintenance events. Start the UML class diagram by showing a box for each event requiring transaction tables. In each box, place a name for the event. Arrange the boxes, one below the other, in the sequence in which the events normally occur.

Step 2: Place the required master tables (files) on the UML class diagram. Accomplish this step by doing the following:

For each event on the UML class diagram (from Step 1), determine the related goods, services, or agent entities. Determine which of the identified entities require master tables. Consider using master tables to track the location of cash and the effect of events on account balances in the general ledger. Add the required master tables to the appropriate side of the UML class diagram. Draw lines connecting the master tables to the related transaction tables.

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Exhibit 5.2  Outline of Steps in Developing a UML Class Diagram (Concluded)

Step 3: Determine the required relationship between the tables by doing the following:

For each of the connecting lines, determine the cardinality of the relationship between the tables. Your cardinalities should be (1,1), (1,m), (m,1), or (m,m).

Write the cardinalities next to the line between the entities. If there are any many-to-many relationships, convert them to one-to-many relationships by adding a junction table. The junction table must include the primary keys of each of the tables in the many-to-many relationship.

Step 4: Determine the required attributes by doing the following:

Assign a primary key to each of the tables. Write the primary key in the box for that entity/table. Link related tables by adding a foreign key to one of the pair in the relationship. Write the foreign keys in the entity boxes, as appropriate. Assign other attributes as needed for providing information content. There will probably not be enough space to enter these attributes in the boxes. Instead, prepare a table that shows the informational attributes for each entity.

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Exhibit 5.4  Revenue Cycle for H & J Tax Preparation Service

H & J Tax Preparation Service offers a variety of tax services. Information about its services is provided in the following Tax Services Report:Tax Services Report

Year-to-DateService# Service Description Fee

Revenues

1040 Federal Individual Income Tax Form 1040 $100$120,000

(long form)Sch-A 1040 Schedule A (itemized deductions)    50   51,000Sch-B 1040 Schedule B (interest & dividend earnings) 50   53,300Sch-C 1040 Schedule C (Sole proprietorship)   110   84,000State State Income Tax Return    80    81,000Corp Corporate Income Tax 30 (per hr.) 103,000

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Exhibit 5.4  Revenue Cycle for H & J Tax Preparation Service (Continued)

The company is interested in developing an automated system for recording services rendered and billing clients. Except for the tax software used to prepare the tax return, the current system is manual. The revenue cycle of H & J Tax Preparation Service, up to the point of collection, is described as follows.A client calls the office to inquire about tax services. The secretary sets an appointment for the client to meet with an accountant. The client meets with an accountant and decides on the tax services that will be needed. The accountant then prepares a Service Request Form indicating the agreed-upon services. An example is shown here:

Service Request Form

Request# 104 Accountant: Jane Smith

Client: Robert Barton Date: 2/10/2003

Service# Service Description Fee

1040 Federal Individual Income Tax Form 1040 (long form) $100Sch-A 1040 Schedule A (itemized deductions) 50Sch-B 1040 Schedule B (interest & dividend earnings) 50State State Income Tax Return 80

  Total $280

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Exhibit 5.4  Revenue Cycle for H & J Tax Preparation Service (Concluded)

The client gives a copy of the Service Request Form to the secretary. For new clients, the secretary takes the client information (e.g. client name, address, contact person, and telephone no.) from the client and records it on a Client Form. She files the client form along with a copy of the Service Request Form in a client folder. A part of the client form is shown here:

Client Form

Client#: 1001

Client: Robert Barton Address: 242 Greene St.St. Louis, MO 63108

Telephone#: 431-555-4530

The accountant obtains information necessary for preparing the returns from the client (e.g., income and deductions). The information is entered into Mega-Tax, a tax software product used at the company. The recording and storage of tax information is handled by the Mega-Tax software and is separate from the rest of the revenue cycle. The company is not planning to integrate the tax preparation software with the rest of the revenue cycle. Thus, in this case, you can disregard the recording, updating, and processing of detailed tax return information. When the tax return is finished, the accountant gives the tax return to the secretary. She writes the services provided and the charges for each on an invoice, with the total amount due shown at the bottom. She then notifies the client that the return is ready.

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Table 5.1  Events and Transaction files for ELERBE, Inc.

ActualEvent Transaction file(s) needed? designRespond to Possibly, if salespeople wish to track a customer’s communications Nocustomer inquiries with the company in order to understand customer preferences.Take order Yes. A file is needed to record details so that the order Yes

can be filled.Pick goods Probably not. The actual quantities picked can be recorded in a No

file during the next event.Ship goods Yes. A file is needed to record quantities shipped so that Yes

inventory balances can be updated.Bill customer Yes. A file is needed to record invoice number, payment Yes

terms, and amount owed so that (1) sales reports can be printed,(2) the customer’s balance due can be updated, and (3) data areavailable for processing the payment when received.

Receive and record Yes. A file is needed to record payments so that they can be applied Yescash receipts against invoices and so that customer balances and cash balances

can be updated.Deposit checks Possibly. A file can be created for comparison to the deposits No

reported on the bank statement, although merely keeping depositreceipts might serve this purpose.

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Table 5.2A  Tables Used in ELERBE’s Order Processing Application

Panel A: Customer TableContact

Customer# Name Address _Person Telephone#

3450 Brownsville C.C. Brownsville,TX Smith 956-555-05313451 Educate, Inc. Fairhaven, MA Costa 508-888-45313452 Bunker Hill C.C. Bunker Hill, MA LaFrank 617-888-8510

Panel B: Inventory TableQuantity_ Quantity_

ISBN Author Title Price On_Hand Allocated

0-256-12596-7 Barnes Introduction to Business $78.35 4,000 3000-127-35124-8 Cromwell Building Database Applications $65.00 3,500 00-135-22456-7 Cromwell Management Information $68.00 5,000 50

Systems0-146-18976-4 Johnson Principles of Accounting $70.00 8,000 2600-145-21687-7 Platt Introduction to E-commerce $72.00 5,000 400-235-62415-6 Rosenberg HTML and Javascript Primer $45.00 6,000 0

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Table 5.2A  Tables Used in ELERBE’s Order Processing Application (Concluded)

Panel C: Order TableOrder# Order_Date Customer#

0100011 05/11/2003 34510100012 05/15/2003 34510100013 05/16/2003 3450

Panel D: Order_Detail TableOrder# ISBN Quantity

0100011 0-256-12596-7 2000100011 0-146-18976-4 2000100012 0-135-22456-7  500100012 0-146-18976-4  50

0100012 0-145-21687-7  40

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Table 5.2B

Inventory

ISBN Author Etc.

0-256-12596-7 Barnes . . . .

0-135-22456-7 Cromwell . . . .

0-146-18976-4 Johnson . . . .

0-145-21687-7 Platt . . . .

Order

Order# Order_DateCustomer#

0100011 05/11/2003 3451

0100012 05/15/2003 3451

Order Detail

Order# ISBN Quantity

0100011 0-256-12596-7 200

0100011 0-146-18976-4 200

0100012 0-135-22456-7 50

0100012 0-146-18976-4 50

0100012 0-145-21687-7 40