Comprehensive ACC 416 Exam 1 Study Guide: AIS, ERP, DFDs, SUA, and Data Processing

System

A set of interdependent elements that work together to accomplish specific objectives. A system has organization, interrelationships, integration, and central objectives.

Subsystem

A component of a larger system; it can usually be divided into smaller subsystems.

Data

Raw facts or figures representing measurements or observations of objects or events.

Information

Data transformed and presented in a form useful for decision making; it adds knowledge or reduces uncertainty.

Information system / MIS

Integrated computer-based and manual components that collect, store, and manage data and provide output information to users.

Accounting information system (AIS)

A specialized subsystem of the IS that collects, processes, and reports information related to the financial aspects of business events.

Operations process

Performs the organization's work and physical/economic activities. Sell goods, ship inventory, receive materials, provide services.

Information process

Collects, stores, maintains, and communicates data about operations.

Management process

Plans, controls, and evaluates operations; establishes authorizations, policies, and procedures.

User (in AIS)

Enters transactions, runs reports, and uses output for decisions.

Designer / analyst (in AIS)

Specifies information needs, documents processes, and helps choose controls.

Evaluator / auditor (in AIS)

Tests whether information is reliable, controls work, and assets/data are protected.

Manager / steward (in AIS)

Interprets results, monitors performance, and ensures compliance.

Simon's three phases of decision making

1. Intelligence: Do we need to decide? 2. Design: What are the possible actions? 3. Choice: Which action should we take?

Structured decisions

All three phases are relatively routine or repetitive.

Unstructured decisions

None (or very little) of the three phases is routine.

Enterprise system

The integrated, organization-wide information system that connects functions and automates business processes.

Enterprise resource planning (ERP) system

The software package used to supply core applications needed by the enterprise system.

Third-party / extended modules

Modules that extend the capabilities of the ERP system.

CRM - Customer Relationship Management

Builds and maintains customer-related data; supports sales, service, and customer relationships.

SFA - Sales Force Automation

Automates sales tasks such as order processing, contact management, and tracking.

SCM - Supply Chain Management

Coordinates the flow of materials, information, and products across suppliers, the company, and customers.

Value chain

The linked set of activities that creates value for a customer.

Data hierarchy

The organization of data elements from smallest to largest: Character, Field, Record, Table/File, Database.

Character

Smallest basic data element: a letter, number, or symbol.

Field

A group of characters representing one attribute.

Record

A group of related fields describing one entity or event.

Table / file

A collection of related records with the same fields.

Database

An integrated collection of related tables/files.

Master data

Repositories maintained over an extended period; include relatively permanent attributes and often cumulative balances.

Standing data

The relatively permanent portion of master data; changed through data maintenance, not by every transaction.

Business-event / transaction data

Facts about a specific economic event; used to update master data.

Information processing

Processing related to economic events.

Data maintenance

Add, delete, or replace standing data.

Manual accounting flow

Analyze and journalize the business event in a journal.

Periodic mode

May be collected over time.

Batch processing

Transactions are accumulated for a period and processed together as a group.

OLTE - Online Transaction Entry

Entered directly at the time and place the event occurs.

Immediate mode

Processing occurs with little or no delay between stages.

OLRT - Online Real-Time

Captured online at occurrence.

E-mail

Nonstandardized messages between people connected by a communications network.

EDM - Electronic Document Management

Capture, storage, management, and control of document images.

EDI - Electronic Data Interchange

Computer-to-computer exchange of business data in structured formats that allow direct processing by the receiving system.

Traditional EDI

EDI transmitted through a value-added network (VAN).

Internet EDI (IEDI)

Secure, structured messages over the Internet to execute business transactions.

WebTrust

An assurance service in which an independent CPA examines whether an entity's online systems meet relevant trust-services criteria.

Data Flow Diagrams (DFDs)

A DFD shows the logical movement and transformation of data.

Context diagram

Highest-level view: the entire system is one process; shows external entities and major data flows crossing the system boundary.

Logical DFD

What the system does: business activities and data needs, independent of people, devices, or implementation.

Physical DFD

How and where the system operates: people, departments, devices, media, and physical files.

Level 0 DFD

Breaks the context process into the system's major processes and data stores.

Top-down partitioning

Begins with the broad context diagram, then decomposes it into Level 0 and successively more detailed levels.

Flowchart

If the question asks about documents, processing media, storage devices, departments, or the sequence of procedures, choose a flowchart.

Document symbol

Rectangle with a wavy bottom; paper document or report, whether input or output.

Computer process symbol

Rectangle; includes processing, inquiries, and file updates.

Manual process symbol

Trapezoid; a person prepares, signs, or otherwise handles a document.

Display symbol

Screen-like curved shape; information displayed electronically.

Start/stop symbol

Rounded terminator; can also represent an external entity in this figure.

On-page connector

Small circle; continuation on the same page, labeled A, B, C, etc.

Off-page connector

Pentagon/home-plate shape; continuation on another page; identify page and connector.

Logic flow

Straight line with arrowhead; direction and sequence of processing.

Telecommunications link

Wavy communication line; electronic transmission.

Bridge

Small arc over a crossing line; flows cross but do not connect.

Annotations

Bracket/note connected by dashed line; explanatory comment, no flow arrow.

Batch total / any total

Special document-like total symbol; control total used to verify processing.

Goods

Box/package symbol; physical inventory or shipment.

How to read a systems flowchart

Read from top to bottom and left to right unless arrows show otherwise.

Seven-step transaction routine

A systematic approach to processing transactions in accounting.

Identify

Read the transaction and determine the business event.

Retrieve

Locate the source documents and master/subsidiary records involved.

Prepare / verify

Record in the proper special journal or general journal.

Journalize

Keeps detail and control totals consistent.

Post

Update the relevant subsidiary ledger; later post journal totals to G/L control accounts as instructed.

Cross-reference

Add invoice numbers, account numbers, posting references, checkmarks, or initials.

File

File documents using the instructed code.

Revenue-cycle document flow

The sequence of documents involved in the revenue cycle.

Customer order / sales order

Documents what the customer requested and internal acceptance.

Bill of lading / shipping document

Evidence that goods were shipped; carrier, destination, and shipment details.

Sales invoice

Bills the customer; contains quantities, unit prices, extensions, and total.

Sales Journal

Records routine credit sales.

A/R subsidiary ledger

Maintains each customer's balance.

Cash receipts prelist

Early listing of money received before further handling.

Remittance advice / customer notice

Notification sent to customers regarding payments.

Deposit slip / bank receipt

Shows cash/checks deposited and external confirmation.

Cash Receipts Journal

Records cash inflows.

Credit memo

Documents reduction of a customer's balance, often for returns/allowances.

General Journal

Records transactions not suited to a special journal and adjusting/correcting entries.

Control objective

The intended outcome of a control process.

Occurrence / validity

A sale should be supported by an approved order and shipping evidence.

Completeness

Prenumbered documents, sequence checks, and prelists reveal missing items.

Accuracy

Recalculate quantity × unit price, invoice total, and batch totals.

Authorization

Credit approval, signatures, and approved prices/terms.

Classification

Use the correct journal and accounts.

Timing / cutoff

Use shipment and transaction dates to record in the correct period.

Safeguarding

Separate cash custody from recording; deposit promptly.

Independent check

Reconcile bank evidence to prelist/journal and subsidiary total to G/L control.

Audit trail

Document numbers, posting references, cross-references, and organized files let an auditor trace forward or backward.

Forward vs. backward tracing

From source document -> journal -> ledger tests completeness; from ledger/journal -> source document tests occurrence/validity.

Data vs. information

Raw facts vs. processed, decision-useful output.

IS vs. AIS

Overall information system vs. subsystem focused on financial aspects of events.