Chapter
2-1
Foundational
Concepts of the
AIS
Chapter
2-2
Accounting Information Systems, 1st Edition
Study Objectives
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
Chapter
2-3
Business 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
2-4
SO 1 The interrelationships of business processes and the AIS
Business
Processes
and the AIS
Exhibit 2-1
Overall View of Transactions,
Processes, and Resulting Reports
Chapter
2-5
SO 1 The interrelationships of business
processes and the AIS
Business Processes and the AIS
Concept Check
1. Which of the following statements is not true?
a.
Accounting information systems must maintain both
detail and summary information.
b. Business processes may vary from company to company.
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.
Chapter
2-6
SO 1 The interrelationships of business processes and the AIS
Types of Accounting Information Systems
Three categories of AIS:
1. Manual systems
2. Legacy systems
3. Modern, integrated IT systems
Chapter
2-7
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Manual Systems
Generally used by small organizations. Entirely
manual system would require:
Chapter
2-8
 Source document
 General journal
 Turnaround document
 Special journals
 General ledger
 Subsidiary ledgers
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Legacy 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
2-9
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Legacy 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
2-10
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Legacy Systems
Decision whether to replace or update legacy systems.
1. Screen scrapers
2. Enterprise application integration
3. Complete replacement of legacy systems
Chapter
2-11
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Modern, 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
2-12
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Concept Check
2. In a manual system, an adjusting entry would most
likely be initially recorded in a
a. special journal.
b. subsidiary ledger.
c. general journal.
d. general ledger.
Chapter
2-13
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Concept Check
3. Which of the following is not a disadvantage of
maintaining legacy systems?
a.
There are fewer programmers available to support and
maintain legacy systems.
b. They contain invaluable historical data that may be
difficult to integrate into newer 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.
Chapter
2-14
SO 2 Types of accounting information systems
Types of Accounting Information Systems
Concept Check
4. Which of the following is a disadvantage of
purchased accounting software, compared with
software developed in-house?
a. It is custom designed for that company.
b. It is less costly.
c. The implementation time is shorter.
d. There are fewer bugs.
Chapter
2-15
SO 2 Types of accounting information systems
Accounting
Software
Market
Segments
Exhibit 2-2
Accounting Software
Market Segments
Chapter
2-16
SO 3 Accounting software market segments
Accounting Software Market Segments
Exhibit 2-3
Popular Accounting Software Programs
within the Market Segments
Chapter
2-17
SO 3 Accounting software market segments
Accounting Software Market Segments
Concept Check
5. Which of the following is not a method of
updating legacy systems?
a. Enterprise application integration.
b. Backoffice ware.
c. Screen scraper.
d. Complete replacement.
Chapter
2-18
SO 3 Accounting software market segments
Accounting Software Market Segments
Concept Check
6. When categorizing the accounting software market,
a company with revenue of $8 million would most likely
purchase software from which segment?
a. Small company.
b. Midmarket.
c. Beginning ERP.
d. Tier 1 ERP.
Chapter
2-19
SO 3 Accounting software market segments
Input Methods for AIS
Input methods used in organizations:
 Source documents and keying
 Bar coding
 Point of sale systems
 EDI
 E-business
Chapter
2-20
SO 4 Input methods used in business processes
Input Methods for AIS
Concept Check
7. An IT system that uses touch-screen cash registers
as an input method is called
a. Electronic data interchange.
b. E-business.
c. Point of sale system.
d. Source documents and keying.
Chapter
2-21
SO 4 Input methods used in business processes
Processing 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
2-22
SO 5 The processing of accounting data
Processing 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
2-23
SO 5 The processing of accounting data
Processing 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
2-24
SO 5 The processing of accounting data
Processing 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
2-25
SO 5 The processing of accounting data
Processing Methods
Concept Check
8. When similar transactions are grouped together for
a specified time for processing, it is called
a. Online processing.
b. Real-time processing.
c. Batch processing.
d. Group processing.
Chapter
2-26
SO 5 The processing of accounting data
Outputs 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
2-27
SO 6 Outputs from the AIS related to business processes
Documenting 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
2-28
SO 7 Documenting processes and systems
Documenting Systems
Process Maps
Pictorial representations of business processes in
which the actual flow and sequence of events in the
process are presented in diagram form.
Exhibit 2-5
Process Map Symbols
Chapter
2-29
SO 7 Documenting processes and systems
Documenting Systems
Exhibit 2-7
Common System Flowchart Symbols
System
Flowcharts
Intended to
depict the entire
system, including
inputs, manual and
computerized
processes, and
outputs.
Chapter
2-30
SO 7 Documenting processes and systems
Documenting Systems
Document
Flowcharts
Flow of documents
and information
among departments
or units within an
organization.
Chapter
2-31
Exhibit 2-8
Payroll System
Flowchart
Documenting Systems
Chapter
2-32
Exhibit 2-9
Restaurant Process Map
Exhibit 2-10
Restaurant Document Flowchart
Chapter
2-33
Exhibit 2-10
Restaurant Document Flowchart
Chapter
2-34
Documenting Systems
Exhibit 2-11
Restaurant Data Flow Diagram
Data Flow Diagrams
Used to show the logical
design of a system.
Chapter
2-35
Documenting Systems
Entity Relationship Diagrams
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
2-36
SO 7 Documenting processes and systems
Documenting Systems
Entity Relationship Diagrams
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
2-37
SO 7 Documenting processes and systems
Exhibit 2-11
ERD of Internet Sales
Documenting Systems
Entity
Relationship
Diagrams
Entity
Relationship
Diagrams
Chapter
2-38
SO 7 Documenting processes and systems
Documenting Systems
Concept Check
10. In documenting systems, which pictorial method is
described as a method that diagrams the actual flow
and sequence of events?
a. System flowchart.
b. Process map.
c. Data flow diagram.
d. Entity relationship diagram.
Chapter
2-39
SO 7 Documenting processes and systems
Client–Server Computing
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.
Chapter
2-40
SO 8 Client-server computing
Client–Server Computing
Two Levels of Client-Server Computing:
1. Distributed presentation.
2. Distributed applications.
Chapter
2-41
SO 8 Client-server computing
Client–Server Computing
Concept Check
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
a. Distributed presentation.
b. Distributed application.
c. Distributed database.
d. Distributed processing.
Chapter
2-42
SO 8 Client-server computing
Ethical Considerations of AIS
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.
Chapter
2-43
SO 9 Ethical considerations at the foundation
of accounting information systems
Copyright
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.
Chapter
2-44
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