Download - Ch02
Chapter 2-1
Chapter 2-2 Accounting Information Systems, 1st Edition
Foundational Concepts of the AIS
Chapter 2-3
1. The interrelationships of business processes and the AIS
2. Types of accounting information systems
3. Accounting software market segments
4. Input methods used in business processes
5. The processing of accounting data
6. Outputs from the AIS related to business processes
7. Documenting processes and systems
8. Client-server computing
9. Ethical considerations at the foundation of accounting information systems
Study ObjectivesStudy ObjectivesStudy ObjectivesStudy Objectives
Chapter 2-4 SO 1 The interrelationships of business processes and the SO 1 The interrelationships of business processes and the
AISAIS
Business Processes and the AISBusiness Processes and the AISBusiness Processes and the AISBusiness Processes and the AIS
Accounting Information System - a system that captures, records, processes, and reports accounting information.
Business Process - a prescribed sequence of work steps completed in order to produce a desired result.
Chapter 2-5
Business Business Processes Processes and the AISand the AIS
Business Business Processes Processes and the AISand the AIS
Exhibit 2-1 Overall View of Transactions, Processes, and Resulting Reports
SO 1 The interrelationships of SO 1 The interrelationships of business processes and the business processes and the AISAIS
Chapter 2-6
b. Business processes may vary from company to company.
1. Which of the following statements is not true?
c. Regardless of the extent of computerization, all accounting information systems must capture data from the transactions within business processes.
d. Business processes categorized as expenditure processes are not intended to be processes that serve customers.
SO 1 The interrelationships of business processes and the SO 1 The interrelationships of business processes and the AISAIS
Business Processes and the AISBusiness Processes and the AISBusiness Processes and the AISBusiness Processes and the AIS
a. Accounting information systems must maintain both detail and summary information.
Concept CheckConcept Check
Chapter 2-7 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystems
Three categories of AIS:
1. Manual systems
2. Legacy systems
3. Modern, integrated IT systems
Chapter 2-8 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsManual Systems
Generally used by small organizations. Entirely manual system would require:
Source document
Turnaround document
General ledger
General journal
Special journals
Subsidiary ledgers
Chapter 2-9 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsLegacy Systems
Existing system, often based on old technology.
Advantages are that legacy systems:
1. Customized to specific needs.
2. Support unique business processes not inherent in generic accounting software.
3. Contain invaluable historical data that may be difficult to integrate into a new system.
4. Well supported and understood by existing personnel.
Chapter 2-10 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsLegacy Systems
Disadvantages are that legacy systems:
1. Costly to maintain.
2. Often lack adequate supporting documentation.
3. Hardware needed to maintain may become obsolete.
4. Not usually based on user-friendly interfaces.
5. Tends to use software written in older computer languages.
6. Often difficult to modify to make user friendly.
7. Difficult to integrate when companies merge.
Chapter 2-11 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsLegacy Systems
Decision whether to replace or update legacy systems.
1. Screen scrapers
2. Enterprise application integration
3. Complete replacement of legacy systems
Chapter 2-12 SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsModern, Integrated Systems
New programs sold by software development companies are more user friendly than legacy accounting systems.
Advantages to purchasing accounting software:
Lower cost
Shorter implementation time
Fewer bugs
Chapter 2-13
b. subsidiary ledger.
2. In a manual system, an adjusting entry would most likely be initially recorded in a
c. general journal.
d. general ledger.
a. special journal.
SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsConcept CheckConcept Check
Chapter 2-14
b. They contain invaluable historical data that may be difficult to integrate into newer systems.
3. Which of the following is not a disadvantage of maintaining legacy systems?
c. Hardware or hardware parts may be unavailable for legacy systems.
d. It can be difficult to integrate various legacy systems into an integrated whole.
a. There are fewer programmers available to support and maintain legacy systems.
SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsConcept CheckConcept Check
Chapter 2-15
b. It is less costly.
4. Which of the following is a disadvantage of purchased accounting software, compared with software developed in-house?
c. The implementation time is shorter.
d. There are fewer bugs.
a. It is custom designed for that company.
SO 2 Types of accounting information systemsSO 2 Types of accounting information systems
Types of Accounting Information Types of Accounting Information SystemsSystemsTypes of Accounting Information Types of Accounting Information SystemsSystemsConcept CheckConcept Check
Chapter 2-16 SO 3 Accounting software market segmentsSO 3 Accounting software market segments
AccountinAccounting g Software Software Market Market SegmentsSegments
AccountinAccounting g Software Software Market Market SegmentsSegments
Exhibit 2-2Accounting Software Market Segments
Chapter 2-17 SO 3 Accounting software market segmentsSO 3 Accounting software market segments
Accounting Software Market Accounting Software Market SegmentsSegmentsAccounting Software Market Accounting Software Market SegmentsSegments
Exhibit 2-3Popular Accounting Software Programs within the Market Segments
Chapter 2-18
b. Backoffice ware.
5. Which of the following is not a method of updating legacy systems?
c. Screen scraper.
d. Complete replacement.
a. Enterprise application integration.
SO 3 Accounting software market segmentsSO 3 Accounting software market segments
Accounting Software Market Accounting Software Market SegmentsSegmentsAccounting Software Market Accounting Software Market SegmentsSegmentsConcept CheckConcept Check
Chapter 2-19
b. Midmarket.
6. When categorizing the accounting software market, a company with revenue of $8 million would most likely purchase software from which segment?
Concept CheckConcept Check
c. Beginning ERP.
d. Tier 1 ERP.
a. Small company.
SO 3 Accounting software market segmentsSO 3 Accounting software market segments
Accounting Software Market Accounting Software Market SegmentsSegmentsAccounting Software Market Accounting Software Market SegmentsSegments
Chapter 2-20 SO 4 Input methods used in business processesSO 4 Input methods used in business processes
Input Methods for AISInput Methods for AISInput Methods for AISInput Methods for AIS
Input methods used in organizations:
Source documents and keying
Bar coding
Point of sale systems
EDI
E-business
Chapter 2-21
b. E-business.
7. An IT system that uses touch-screen cash registers as an input method is called
c. Point of sale system.
d. Source documents and keying.
a. Electronic data interchange.
SO 4 Input methods used in business processesSO 4 Input methods used in business processes
Input Methods for AISInput Methods for AISInput Methods for AISInput Methods for AIS
Concept CheckConcept Check
Chapter 2-22 SO 5 The processing of accounting dataSO 5 The processing of accounting data
Processing MethodsProcessing MethodsProcessing MethodsProcessing Methods
Batch Processing -Transactions are grouped. Advantages
1. Efficient for large volumes of like transactions.
2. Audit trail is maintained.
3. Generally use less costly hardware and software.
4. Hardware and software systems are not as complicated as on-line systems.
5. Generally easier to control than other types of computerized systems.
6. Personnel become specialized and efficient in processing routine transactions.
Chapter 2-23 SO 5 The processing of accounting dataSO 5 The processing of accounting data
Processing MethodsProcessing MethodsProcessing MethodsProcessing Methods
Batch Processing -Transactions are grouped. Disadvantages
1. Processing can take longer
2. Adding or deleting records takes much computer maintenance time.
3. Some data duplication is likely.
4. Integration across business processes is difficult in legacy systems that are batch oriented.
5. Lag while all transactions in a batch are collected.
6. May require that transaction and master files be sorted in the same sequential order.
Chapter 2-24 SO 5 The processing of accounting dataSO 5 The processing of accounting data
Processing MethodsProcessing MethodsProcessing MethodsProcessing Methods
Online and Real-Time Processing
Advantages
1. System checks for input errors.
2. Information provided on a timely basis.
3. All files are constantly up to date.
4. The business processes are integrated into a single database so that a single system is achieved.
Chapter 2-25 SO 5 The processing of accounting dataSO 5 The processing of accounting data
Processing MethodsProcessing MethodsProcessing MethodsProcessing Methods
Online and Real-Time Processing
Disadvantages
1. Hardware and software are more expensive than a batch systems.
2. A single database that is shared is more susceptible to unauthorized access of data.
3. Real-time systems can be difficult to audit.
Chapter 2-26
b. Real-time processing.
8. When similar transactions are grouped together for a specified time for processing, it is called
Concept CheckConcept Check
c. Batch processing.
d. Group processing.
a. Online processing.
SO 5 The processing of accounting dataSO 5 The processing of accounting data
Processing MethodsProcessing MethodsProcessing MethodsProcessing Methods
Chapter 2-27 SO 6 Outputs from the AIS related to business processesSO 6 Outputs from the AIS related to business processes
Outputs of the AISOutputs of the AISOutputs of the AISOutputs of the AIS
General Categories of Outputs
1. Trading partner documents such as checks, invoices, and statements
2. Internal documents
3. Internal reports
4. External reports
Chapter 2-28 SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems
Pictorial Representations of processes and systems include:
1. Process maps
2. System flowcharts
3. Document flowcharts
4. Data flow diagrams
5. Entity relationship diagrams (ER diagrams)
Chapter 2-29
Process Maps
SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems
Pictorial representations of business processes in which the actual flow and sequence of events in the process are presented in diagram form.
Exhibit 2-5Process Map Symbols
Chapter 2-30
System Flowcharts
SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting Documenting SystemsSystemsDocumenting Documenting SystemsSystems
Intended to depict the entire system, including inputs, manual and computerized processes, and outputs.
Exhibit 2-7Common System Flowchart Symbols
Chapter 2-31
Document FlowchartsFlow of documents and information among departments or units within an organization.
Documenting Documenting SystemsSystemsDocumenting Documenting SystemsSystems
Exhibit 2-8Payroll System Flowchart
Chapter 2-32
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems Exhibit 2-9Restaurant Process Map
Chapter 2-33
Exhibit 2-10Restaurant Document Flowchart
Chapter 2-34
Exhibit 2-10Restaurant Document Flowchart
Chapter 2-35
Documenting Documenting SystemsSystemsDocumenting Documenting SystemsSystems
Exhibit 2-11Restaurant Data Flow Diagram
Used to show the logical design of a system.
Data Flow Diagrams
Chapter 2-36
Entity Relationship Diagrams
SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems
Pictorial representations of the logical structure of databases.
Entities - items in the accounting system, such as employees, customers, vendors, and inventory items.
Each entity has attributes, such as last name, first name, pay rate, and number of withholdings.
Chapter 2-37
Entity Relationship Diagrams
SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems
Cardinality refers to how many instances of an entity relate to each instance of another entity.
1. One to one: Each employee has one personnel file.
2. One to many: One supervisor has many employees.
3. Many to many: Each vendor can sell many items.
Chapter 2-38
Entity Relationship Diagrams
Documenting Documenting SystemsSystemsDocumenting Documenting SystemsSystems
SO 7 Documenting processes and SO 7 Documenting processes and systemssystems
Exhibit 2-11ERD of Internet Sales
Entity Relationship Diagrams
Chapter 2-39
b. Process map.
10. In documenting systems, which pictorial method is described as a method that diagrams the actual flow and sequence of events?
Concept CheckConcept Check
c. Data flow diagram.
d. Entity relationship diagram.
a. System flowchart.
SO 7 Documenting processes and systemsSO 7 Documenting processes and systems
Documenting SystemsDocumenting SystemsDocumenting SystemsDocumenting Systems
Chapter 2-40
Two types of computers are networked together to accomplish the application processing.
Characteristics:
1.Client and server computer are networked together.
2.System appears to users to be one integrated whole.
3.Individual parts of processing are shared between server and client.
4.Client computer participates in processing or data manipulation in some meaningful way.
SO 8 Client-server computingSO 8 Client-server computing
Client–Server ComputingClient–Server ComputingClient–Server ComputingClient–Server Computing
Chapter 2-41
Two Levels of Client-Server Computing:
1. Distributed presentation.
2. Distributed applications.
SO 8 Client-server computingSO 8 Client-server computing
Client–Server ComputingClient–Server ComputingClient–Server ComputingClient–Server Computing
Chapter 2-42
b. Distributed application.
12. In a client–server system, when the client PC manipulates data for presentation, but does not do any other significant processing, it is called
Concept CheckConcept Check
c. Distributed database.
d. Distributed processing.
a. Distributed presentation.
SO 8 Client-server computingSO 8 Client-server computing
Client–Server ComputingClient–Server ComputingClient–Server ComputingClient–Server Computing
Chapter 2-43
Accountants should be aware of opportunities for unethical behaviors within the various business processes.
As a company chooses features and options for its accounting information systems, the importance of monitoring those systems should not be overlooked as a factor in decision making.
SO 9 Ethical considerations at the SO 9 Ethical considerations at the foundation of accounting foundation of accounting information systemsinformation systems
Ethical Considerations of AISEthical Considerations of AISEthical Considerations of AISEthical Considerations of AIS
Chapter 2-44
Copyright © 2008 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Request for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
CopyrightCopyrightCopyrightCopyright