Accounting Information Systems Notes

Data Processing Cycle

  • Data Input
    • Capture transaction data triggered by a business activity (event).
    • Make sure captured data are accurate and complete.
    • Ensure company policies are followed (e.g., approval of transaction).
  • Data Capture
    • Information collected for an activity includes:
      • Activity of interest (e.g., sale)
      • Resources affected (e.g., inventory and cash)
      • People who participated in the activity (e.g., customer and employee)
    • Information comes from source documents.
  • Source Documents
    • Captures data at the source when the transaction takes place
      • Paper source documents
      • Turnaround documents
      • Source data automation (captured data from machines, e.g., point-of-sale scanners at grocery store)
  • Data Storage
    • Important to understand how data is organized
      • Chart of accounts
        • Coding schemas that are well thought out to anticipate management needs are most efficient and effective.
      • Transaction journals (e.g., Sales)
      • Subsidiary ledgers (e.g., Accounts receivable)
      • General ledger
    • With the above, one can trace the path of the transaction (audit trail).
  • Coding Techniques
    • Sequence codes—items numbered consecutively to account for all items (i.e., prenumbered forms)
    • Block code—blocks of numbers reserved for specific categories of data (i.e., product numbers that start with a 2 are refrigerators)
    • Group codes—two or more subgroups of digits used to code items (i.e., car V I N #’s)
    • Mnemonic codes—letters and numbers interspersed to identify an item (i.e. Dry300W05 is low end (300), white (W) dryer (D R Y) made by Sears (05))
  • Data Storage Elements
    • Data is stored in master files or transaction files.
  • Data Processing
    • Four types of processing (C R U D):
      • Creating new records (e.g., adding a customer)
      • Reading existing data
      • Updating previous record or data
      • Deleting data
    • Data processing can be batch processed (e.g., post records at the end of the business day) or in real-time (process as it occurs).
  • Information Output
    • The data stored in the database files can be viewed
      • Online (soft copy)
      • Printed out (hard copy)
        • Document (e.g., sales invoice)
        • Report (e.g., monthly sales report)
        • Query (question for specific information in a database, e.g., Which division had the most sales for the month?)

Enterprise Resource Planning (E R P) Systems

  • Integrates activities from the entire organization
    • Revenue Cycle
    • Expenditure Cycle
    • Production Cycle
    • H/R Payroll Cycle
    • General Ledger and Reporting System

Advantages of E R P System

  • Integrated enterprise-wide single view of the organization’s data which streamlines the flow of information.
  • Data captured once (i.e., no longer need sales to enter data about a customer and then accounting to enter same customer data for invoicing).
  • Greater visibility and monitoring capabilities for management.
  • Improve access of control of the data through security settings.
  • Standardization of procedures and reports.
  • Improves customer service.
  • Increases productivity through automation.

Disadvantages of E R P System

  • Costly
  • Significant amount of time to implement
  • Customizing or standardizing a business process
  • Complexity
  • User resistance (learning new things is sometimes hard for employees)