Transcript Accounting Information Systems: an overview

Overview of Transaction Processing
and Enterprise Resource Planning
Systems
Chapter 2
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Learning Objectives
• Describe the four parts of the data processing cycle and the major
activities in each.
• Describe the ways information is stored in computer-based
information systems.
• Discuss how organizations use enterprise resource planning (ERP)
systems to process transactions and provide information.
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Data Processing Cycle
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Data Input
Steps in Processing Input are:
• Capture transaction data triggered by a business
activity (event).
▫ Information comes from source documents.
• Make sure captured data are accurate and
complete.
• Ensure company policies are followed (e.g.,
approval of transaction).
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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)
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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.
▫ General ledger
▫ Subsidiary ledgers (e.g., Accounts receivable)
▫ General journal
▫ Transaction/specialized journals (e.g., Sales)
Note: With the above, one can trace the path of the
transaction (audit trail).
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Audit trail for
Invoice #156 for
$1,876.50 sold to
KDR Builders
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DATA STORAGE
• General ledger
The general ledger is the summary level
information for all accounts (asset, liability,
equity, revenue, and expense). Detail
information is not kept in this account.
A/P
$1000
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A/R
$600
DATA STORAGE
• General
Example:ledger
Suppose XYZ Co. has three
customers. Anthony Adams owes XYZ $100. Bill
Brown owes $200. And Cory Campbell owes
XYZ $300. The balance in accounts receivable in
the general ledger will be $600, but you will not
be able to tell how much individual customers
owe by looking at that account. The detail isn’t
there.
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DATA STORAGE
• General ledger
• Subsidiary ledger
The subsidiary ledgers contain the detail
accounts associated with the related general
ledger account. The accounts receivable
subsidiary ledger will contain three separate
t-accounts—one for Anthony Adams, one for Bill
Brown, and one for Cory Campbell.
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DATA STORAGE
• General ledger
• Subsidiary ledger
The related general ledger account is often
called a “control” account.
The sum of the subsidiary account balances
should equal the balance in the control
account.
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DATA STORAGE
• General ledger
• Subsidiary ledger
▫ Detailed data for a
General Ledger
(Control) Account
that has individual
sub-accounts e.g.:
 Accounts Payable
 Accounts Receivable
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A/P
$1000
• Joe Smith
$250
• Patti Jones
$750
A/R
$600
• ACME
Inc.$150
• Jones, Inc
$450
DATA STORAGE
Journals
• General
▫ Infrequent or specialized transactions
▫ Used to record:




Non-routine transactions, such as loan payments
Summaries of routine transactions
Adjusting entries
Closing entries
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DATA STORAGE
Journals
• Specialized
▫ Repetitive transactions
 E.g., sales transactions
▫ Used to record routine transactions.
▫ The most common special journals are:




Cash receipts
Cash disbursements
Credit sales
Credit purchases
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COMPUTER-BASED STORAGE CONCEPTS
• Data is stored in master files or transaction files.
• A master file is a file that stores cumulative
information about an organization’s entities.
• It is conceptually similar to a ledger in a manual
AIS in that:
▫ The file is permanent.
▫ The file exists across fiscal periods.
▫ Changes are made to the file to reflect the effects
of new transactions.
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COMPUTER-BASED STORAGE CONCEPTS
• A transaction file is a file that contains
records of individual transactions (events) that
occur during a fiscal period.
• It is conceptually similar to a journal in a
manual AIS in that:
▫ The files are temporary.
▫ The files are usually maintained for one fiscal
period.
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COMPUTER-BASED STORAGE CONCEPTS
• Transaction
▫ Contains records of a
business from a specific
period of time
• Master
▫ Permanent records
▫ Updated by transaction with
the transaction file
• Database
▫ Set of interrelated files
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Transaction
File
Updated
Master
File
Master
before
Update
DATA PROCESSING
• Batch processing:
▫ Source documents are grouped into batches, and
control totals are calculated.
▫ Periodically, the batches are entered into the
computer system, edited, sorted, and stored in a
temporary file.
▫ The temporary transaction file is run against the
master file to update the master file.
▫ Output is printed or displayed, along with error
reports, transaction reports, and control totals.
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DATA PROCESSING
• Online, batch processing:
▫ Transactions are entered into a computer system
as they occur and stored in a temporary file.
▫ Periodically, the temporary transaction file is run
against the master file to update the master file.
▫ The output is printed or displayed.
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DATA PROCESSING
• Online, real-time processing
▫ Transactions are entered into a computer system
as they occur.
▫ The master file is immediately updated with the
data from the transaction.
▫ Output is printed or displayed.
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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., What division had the most sales
for the month?)
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Enterprise Resource Planning (ERP)
Systems
• Integrates activities from the entire organization
▫
▫
▫
▫
▫
Production
Payroll
Sales
Purchasing
Financial Reporting
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Advantages of ERP System
• Integrated enterprise-wide allowing for better flow
of the information as it’s stored in a centralized
database and can be accessed by various
departments which also improves customer service.
• 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)
• Improve access of control of the data through
security settings
• Standardization of procedures and reports
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Disadvantages of ERP System
• Costly
• Significant amount of time to implement
• Changes to an organization’s existing business
processes can be disruptive
• Complex
• User resistance (learning new things is
sometimes hard for employees)
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