MANAGEMENT INFORMATION SYSTEMS 8/E

Raymond McLeod, Jr. and George Schell

Chapter 11
The Accounting
Information System

11-1
Copyright 2001 Prentice-Hall, Inc.
 What is Data Processing?
■ Manipulation or transformation of symbols
for the purpose of increasing their
usefulness.
■ Data processing (DP) and transaction
processing (TP) are often used
interchangeably.
■ Applied to business data

11-2
 Accounting Information
Systems (AIS)
■ Gathers data describing a firm’s activity
■ Transforms data into information
■ Makes information available to users inside
and outside the firm

11-3
 A Model of an Accounting Information System
Environment

Information Management

Data
Data processing
software

Database
Accounting
Information
System

Input Output
physical Transform physical
resources resources

Environment
11-4
 Data Processing Tasks

1. Gather data
– Each transaction is documented
– What happened?
– When did it happen?
– How much (volume, value)?
– Transactions describe

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Data Processing Tasks [cont.]

2. Manipulate data
– Classify (use codes)
– Sort
– Calculate
– Summarize

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Data Processing Tasks [cont.]

3. Store data
– Describes each transaction
– Represents most of the database

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 Data Processing Tasks [cont.]

4. Document preparation
– Triggers
» By an action
» By a time schedule
– Hardcopy or on-screen

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 Characteristics of the AIS

■ Performs necessary tasks

■ Standard procedures
■ Detailed data
■ Historical focus
■ Provides minimal problem-solving
information

11-9
 Sample AIS
The Distribution System
■ Users
– Manufacturers
– Wholesalers
– Retailers
■ General in nature
■ Used in many different types of firms
– Retailers
– Manufacturing
– Service

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 DFDs

■ Data flow diagram

– Document a system in a hierarchical manner
– Data flows, processes, environmental elements
■ Context level is overall system within
environment
■ Leveled and Balanced DFDs

11-11
 Sales orders
A Context Diagram of the
Customers
Distribution System
Commitments

Purchases orders
Rejected
sales
order
notices
Shipments

Invoices Supplier invoices

Suppliers
Distribution Supplier statements
Statements
system
Payments by customers

Payments to suppliers

Income Balance
statement sheet
Stock Materials
Budget stockroom
reports
Management
Other reports
11-12
 Sales Orders
Customers
Rejected sales order notices A Figure 0 Diagram of the
Invoices
Distribution System
Statements 1.
Payments by customers
Fill
Orders
Receivables ledger data

Inventory ledger data

Purchasing data Commitments
Received
items

3. Payables ledger data 2. Purchase Orders

Maintain Other reports

Order
Shipments Suppliers
general replenish-
Budget reports Supplier invoices
ledger ment
stock
Income Balance Supplier statements
statement sheet
Payments to suppliers

Management
Materials
Stock
stockroom 11-13
 Sales orders
A Figure 1 Diagram of the
Rejected sales
Systems that Fill Customer
Customers order notices Orders
Accepted orders
1.1
Order
Entry
Payments by customers

Filled items
Statements

Completed 1.2
orders Inventory

Invoices

Billed orders 1.3

Billing
1.4 Purchasing data
Accounts Inventory
Receivables ledger data 2
receivable ledger data
Received
2 items
3 3 11-14
A Figure 2 Diagram of the Systems that Order Replenishment Stock
Purchasing data Commitments
1 2.1
Purchasing Purchase orders

Issued purchase
Filled order data Shipments
purchase Suppliers
orders

Received items
1
2.2
Receiving
Stock Materials
stockroom
Received
purchases Supplier invoices

2.3
Incurred obligations Supplier statements
Accounts
payable
Payable Payments to suppliers
ledger data
3
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 A Figure 3 Diagram of the Systems That
Perform General Ledger Processes
Receivables ledger data 3.1
1 General ledger records
Update
Inventory ledger data general Updated general ledger records
1
ledger
Payables ledger data
2
Management report data
General
ledger

Other reports
3.2
Budget reports
Prepare
management

reports
Balance sheet
Income statement Management

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 Fill Customer Orders

■ Order entry
– Sales order form
■ Inventory
– Process sales
– Process receipts
– Feed general ledger

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 A Figure 1.1 Diagram of the Order Entry System
Sales orders Edit rejects
Customers Sales
Sales
order
order
Edited edit
edit
orders ejects
ejects
Rejected 1.1.1
sales order Edit order
notices Customer
Customer
data
credit
creditfile
file
Credit data
1.1.2
1.1.2
Edited and checked orders Computer
Computer
credit
credit
check
check
Sales
Accepted order
orders Credit Rejects credit
1.1.3 Order data
1.2 rejects
Log in
orders

1.1.4 Date filed

Completed orders Mark
1.3 Order log
filled
orders
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 A Figure 1.2 Diagram of the Inventory System
1.1
Accepted
orders
1.2.1
1.2.1 Received
1.2.3
1.2.3
Check
Check Item Inventory items
Add
Add 2
the
the records file additions
received
received
balance
balance items
items
on
onhand
hand
Backorder
records Inventory
Inventory
Items file
file
Backorder
Backorder available
file
file
Updated Inventory
item Inventory ledger
records records data
1.2.2 1.2.4 3
1.2.2 1.2.4
Check
Check Provide
Provide
Filled the
the Purchasing data general
general
items reorder
reorder ledger
ledger
point
point data
data

1.3 2
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 Billing

■ Invoice
– Note:
» 1. Customer data
» 2. Item data

11-20
 1.2 A Figure 1.3 Diagram of the
Filled Billing System
items

1.3.1 Customer data

Obtain Customer
customer file
data

Invoice
data
1.3.2
Prepare
Invoices invoices Billed orders
Customers
Customers 1.4

Completed
orders
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1.1
 Accounts Receivable

■ Four separate triggers

– Today's sales
– Today's payments
– Time to send statements
– Need to provide general ledger data

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1.3
Billed orders A Figure 1.4 Diagram of the
Accounts Receivable System
1.4.1 New receivables Receivables records
Add new
receivables

1.4.4
Provide
Accounts
Accounts general
Statement records receivable
receivable ledger data
file
file
Receivables Receivables
records ledger data
3
1.4.3 to delete
Prepare 1.4.2
statements Delete paid
receivables
Statements Paid
receivables Paid
Payments by
records receivables
Customers customers file
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 Order Replenishment Stock

■ Purchasing
– Emerging technologies
» EDI
» ISDN
– Purchase order

11-24
 A Figure 2.1 Diagram of the Purchasing System
Purchasing data 2.1.1 Past performance data Supplier
Supplier
1 Select file
suppliers
file
Inventory
and supplier data

Purchase order 2.1.2

data Obtain verbal Commitments
commitments
Issued purchase
order data
2.2 Purchase Orders
2.1.3 Suppliers
Prepare
Purchase
2.3 purchase
Incurred order records
orders
Obligations
Outstanding
Outstanding
purchase
purchase Purchase records
order
orderfiles
files to close out
Purchase
Purchase
Order
Order
2.1.4 Filled purchase Orders
history
historyfile
file
Removed purchase Close out 2.2
order records purchase
orders
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A Figure 2.2 Diagram of the Receiving System
2.1
Issued
purchase
order
data
Purchased
Suppliers item data
Purchased
Purchased
items
itemsfile
file
Shipments
Receipt
2.2.1 information
Stocks process
receipts

Received items
1
Materials 2.2.1
stockroom Notify Filled purchase orders
other
systems 2.1

Received purchases
11-26 2.3
 Accounts Payable

■ The firm pays suppliers when:

1. Stock was ordered (P.O. file copy)
2. Stock was received (Received purchases
file)
3. Invoice

11-27
 A Figure 2.3 Diagram of the Accounts Payable System
Incurred
Obligations Payables
2.1 Payables Ledger
Records
New Payables Data
2.3.1
data
Set up 2.3.4
supplier Accounts Provide 3
Accounts
payables payable
payable general
records file ledger
file
data
Received Payables
2.2 Purchases Records to Paid Payables Records
delete Paid
Paid
Received payables
payables
Received
purchases 2.3.3 file
file
purchases Supplier Invoices
file
file Delete paid
payables Invoice
Payment Invoiceandand Supplier
Receipt statement
data statement statements
Data file
Paid Supplier file
2.3.2 Data Invoice Data
Make
Suppliers
Suppliers
supplier
payments
Payments to Suppliers
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 AIS is the Foundation System

■ The AIS must be implemented first

– MIS
Depends on a
– DSS well-designed AIS
– ES

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 Summary
■ AIS maintains financial records of the firm
■ Data processing components
– Data gathering
– Data manipulation
– Data storage
– Document preparation
■ AIS Subsystems
■ AIS contributes to problem solving

11-30