AIS (PRELIMS) 9.

) Support

Chapter 1: Accounting Information NCH Express Accounts

Systems and the Accountant’s Role - is professional business accounting software,
Accounting Information System perfect for small businesses needing to
document and report on incoming and outgoing
- is a software that a business uses in collecting, cash flow including sales, receipts, payments
storing, and processing financial data that are and purchases.
used for decision-making. It is a computer-
based method to track down accounting activity
in conjunction with information technology QuickBooks
resources.
- is the most popular small business accounting
- gives accurate data to the managers before software businesses use to manage income and
making any significant decisions that will either expenses and keep track of the financial health
make or break their business. of their business. You can use it for invoicing
customers, paying bills, generating reports, and
preparing taxes. The QuickBooks product line
The basic functions of Accounting Information includes several solutions that work great for
System are: anyone, from a freelancer to midsized business.
1.) Collect and Process Data
- the phase where accountants or
bookkeepers gather data from cash Business Processes
sales, receivables, and payroll. - A sequence of activities: for acquiring,
2.) Providing Important Reports to the producing, and selling goods and services.
Management
- Management uses the reports derived
from AIS to analyze the company’s
Models of business processes viewed in terms
current operations and financial
of transaction cycles. Each transaction cycle
condition and gear up for the future by
involves several events.
making plans and setting up goals.
3.) Accuracy and Security
Three main transaction cycles:

Steps to successfully implement AIS: 1.) Acquisition (purchasing) cycle

2.) Conversion cycle
1.) Detailed Requirements Analysis
3.) Revenue cycle
2.) System Design
3.) Documentation
4.) Testing Typical Business Processes
5.) Training
1.) Production
6.) Data Conversion
2.) Sales
7.) Rolling Out of the New System
8.) Tools
 standards and also meets the organization’s
own requirements.
Management Information System (MIS)
Information
- is a system that captures data about an
organization, stores and maintains the data, - most valuable resources
provides meaningful information for
management.
Accounting systems deals primarily with
- can be viewed as a set of subsystems that
economic events that affect an organization’s
provide information for such functions as accounting equation – that is,
production, marketing, human resources,
ASSETS = LIABILITIES + OWNERSHIP EQUITY
accounting, and finance.
Economic events fitting this definition are called
accounting transactions.
Accounting Information System (AIS)

- is a subset of an organization’s MIS that

Two Types of Transactions:
provides accounting and financial information
and other information obtained in the routine 1.) External Transactions
processing of accounting transactions. - arise from exchanges with outsiders
such as purchasing or selling goods and
services.
Accounting information meets the legitimate 2.) Internal Transactions
needs of external users, communicates among - arise largely from the accumulation of
parties transacting business with one another cost data and the assignment of costs
and provides a basis for informed management to products, business units or activities.
decision making.

AIS - is a delivery system for accounting

External Financial Statements information.

- presently consisting of the balance sheet, the

income statement, the statement of changes in
Components of AIS
ownership equity and the cash flow statement –
are prepared for investors, creditors, labor 1.) Technology
unions, suppliers, customers and other outside 2.) Database
parties. 3.) Reporting

Accounting System Information System - is a man-made system

that
- captures, stores, processes and communicates
information in accordance with applicable generally, consists of an integrated set of
professional, industry and government computer-based components and manual
components established to collect, store and
manage data and to provide output information Value Chain - is the system of activities that
to users. transform inputs into outputs valued by the
customer.

Chapter 2: Enterprise Systems

The Value of Systems Integration
Enterprise Systems
- Coordination of activities in the value chain.
- Integrates business processes and information
from entire enterprise. - Performs this coordination by sharing data
across business processes.
- Helps coordinate the operation of business
functions.

- are software packages that can be used for the Solution to Inefficient Customer Service
core systems necessary to support enterprise
- Enterprise system establishes ATP (available to
systems.
promise) by checking warehouses and
scheduled manufacturing.

Third-Party Modules - Database automatically determines price and

creditworthiness.
1.) Customer Relationship Management
(CRM) - builds and maintains customer
related data.
Major ERP Modules
2.) Customer Self-Service (CSS) - allows
customers to complete tasks without 1.) Sales and Distribution
assistance. 2.) Materials Management
3.) Sales Force Automation (SFA) - 3.) Financial Accounting
automates sales tasks such as order 4.) Controlling]
processing and tracking. 5.) Human Resources
4.) Supply Chain Management (SCM) -
plans and executes demand planning,
inventory acquisition, manufacturing, Chapter 3: Electronic Business (E-Business
distributing and selling. Systems)
5.) Product Lifecycle Management (PLM) -
manages product data from design Electronic Business
through disposal of product.
- Electronically linking business processes
6.) Supplier Relationship Management
among individuals and organizations.
(SRM) - manages the interactions with
organizations that supply the goods and - Byproduct: elimination of sales staff, normally
services to an enterprise; includes intermediary between two parties to
procurement and contract transactions.
management.
- Transactions completed quicker, more
efficiently and more effectively.
Batch Processing Data Flow Diagrams

- Known as periodic mode because master data - are used to graphically represent the flow of
is updated periodically data in a business information system. DFD
describes the processes that are involved in a
system to transfer data ROM the input to the
Methods of Conducting E-business file storage and report generation.

 E-mail - generally requires human - can be divided into logical and physical. The
translation and data entry. logical data flow diagram describes the flow of
 Electronic Document Management - data through a system to perform certain
capture and storage of document functionality of a business. The physical data
images instead of paper. flow diagram describes the implementation of
 Electronic Data Interchange - computer- the logical data flow.
to-computer exchange of business data
in structured formats that allow direct
processing of those electronic Logical Data Flow
documents by the receiving computer
- focuses on the business and how the business
system.
operates. It is not concerned with how the
 Internet Commerce - computer-to-
system will be constructed.
computer exchange of business event
data in structured or semi-structured
formats via Internet communication
Physical Data Flow
that allows the initiation and
consummation of business events. - shows how the system will be implemented,
including the hardware, software, files, and
people in the system. It is developed such that
Chapter 4: Documenting Information the processes described in the logical data flow
Systems diagrams are implemented correctly to achieve
the goal of the business.
Documentation Process

- Process documentation is an important skill in

accounting. Bubble symbol – depicts an
entity or a process within which
- Data flow diagrams portray a business incoming data flows are
processes’ activities, stores of data, and flows of transformed into outgoing data
data among those elements. flows
- System flowcharts present a comprehensive
picture of the management, operations,
information systems, and process controls Data flow symbol – represents a
embodied in business processes. pathway for data.
 External entity symbol – Database Approach
portrays a source or a
- Facts about events are stored in relational
destination of data outside the
database tables instead of separate files.
system
- Solves many of the problems caused by data
redundancy.
Data store symbol – represents
- Improves the efficiency of processing data by
a place where data are stored.
eliminating data redundancies and improving
data integrity.

System Context Diagram - Enables the creation of integrated business

- level 0 DFD information systems that include data about all

of a company’s operations in one massive
- is the highest level in a data flow diagram and
collection of relational tables.
contains only one process, representing the
entire system, which establishes the context - Multiple users from throughout the
and boundaries of the system to be modeled. organization can view and aggregate event data
in a manner most conducive to their needs.

Chapter 5: Database Management Systems

Problems with Applications Approach
Applications Approach
1.) Data redundancy - files stored may
- Concentrates on the process being performed. include redundant information
- Data support the role of the programs that run increasing storage requirements and
in each application system. the risk of inconsistency.
2.) Data in files is not shareable across
- Each application collects and manages its own applications because applications
data in separate, distinguishable files. depend on a fixed record layout in data
- Data redundancy can cause inconsistencies files.
among the same data in different files when
information is updated in one file but not the
others. Record Layout – Applications Approach

- Storage costs are increased because the - Each application stores all the data
system must store and maintain multiple required for analysis.
versions of the same data in different files. - Shows many redundancies across
- Data residing in separate files are not applications/files.
shareable - Data lacks integrity when the data stored
by one application is inconsistent with data
stored by another application.
 - Data gets stored in the form of a
collection of fields in which each field
Database Management Systems
contains only one value, i.e., every
- A set of integrated programs designed to individual record has only one parent
simplify the tasks of creating, accessing, and and a parent can have one or more
managing data. than one children.
- To retrieve the data, we need to
- Integrates a collection of files that are traverse each tree until we get the
independent of application programs and are desired data.
available to satisfy a number of different - It is simple but inflexible due to the
processing needs. parent-child one-to-many relationship.
- Database contains data related to all the They are mostly used in Banking and
organization’s applications in one place. Telecommunications industries to build
high performance and manage
- Supports normal data processing needs and applications.
enhances the organization’s management - As the name suggests, ‘Hierarchy’, it is
activities by providing data useful to managers. a tree-like structure. There are links
- Data is independent of the application that attached between each record as a
created the data (i.e., can be changed/used by parent-children relationship.
other applications).

- The term enterprise database is synonymously 2.) Network Databases

with database management system or DBMS. - The network database structure was
invented by Charles Bachman.
Network database management
Types of DBMS systems (Network DBMSs) uses network
structure to create a relationship
1.) Hierarchical Databases
between entities.
2.) Network Databases
- Network databases are mainly used on
3.) Relational Databases
a large network of computers.
4.) Object-oriented Databases
- Network databases are similar to
5.) Graph Databases
hierarchical databases differs with one
6.) ER model Databases
key point that in network databases
7.) Document Databases
one node can have a relationship with
multiple entities.
- In network databases, parents are
1.) Hierarchical Databases
termed as occupier and children are
- Hierarchical Database System
termed as members. Data in the
Structure was developed by IBM in the
network database is organized as many-
early 1960s.
to-many relationships.
- In this type of Database, data gets
stored in parent-children relationship
3.) Relational Databases
nodes. Also, the records not only
- Relational Databases are the most
contain the data of it but of their parent
popular among all databases.
and children as well.
 - In this type of database, there is a themselves are stored in the object-
relationship between data and that is oriented database.
stored in the form of the table of rows - Every object in Object-Oriented
and columns, such that row represents databases contains two elements:
record and column represents the  Piece of data (e.g.,
attribute. sound, video, text, or
- Every individual field represents the graphics)
data value. In order to query the  Instructions or
Relational Databases, Structured Query software programs
Language (SQL) is used which includes called methods
insertion, deletion, manipulation and
search the records.
- Relational database depicts the 5.) Graph Databases
relation between two or more tables, - Graph databases are NoSQL databases
but how this relation is made? Through and it uses the graphical structure for
Key Fields. Every row has its unique key semantic queries.
field and these key fields are used to - Data is stored in the form of nodes,
connect one table to another one. edges, and properties in which node is
equivalent to a record, the edge is a link
4.) Object-Oriented Databases between two nodes and properties are
- Object-oriented Databases were additional information added into the
created in the early 1980s. nodes.
- Object-Oriented Databases deals with
the functionality of the object-oriented 6.) ER Model Databases
programming and it increases the - Entity-Relations Model Database was
semantics of the C++ and Java. developed by Peter Chen 1976.
- Advance programming language - Here, the ER model is applied as a
objects are required in Object-Oriented database. Each row in the table
Databases. represents one instance of an object
- It provides full-featured database type, and each column in a table
programming capability while represents an attribute type.
containing native language
compatibility such that it alters the 7.) Document Databases
database functionality to object - Document databases (DBs) are also a
programming languages. NoSQL database.
- Applications in Object-Oriented - It stores data in the form of
databases require less code, use more documents which are key values. Each
natural data modeling, and code bases document makes the relationship of the
are easier to maintain. data with other data elements and
- Object developers can write complete attributes.
database applications with a less - It became popular due to its storage of
amount of effort and in less time. documents and NoSQL properties. The
- Object-oriented databases use small specialty of NoSQL data storage is that
software called objects. The objects
 it provides a faster mechanism for 6.) Diversification - The process of
storing and searching for documents. allocating capital in a way that reduces
the exposure to any particular asset or
Disadvantages of DBMS
risk.
1.) Expensive to implement. 7.) Internal - Arise largely from the
2.) If the DBMS fails, all the organization’s accumulation of cost data and the
information processing halts. assignment of costs to products,
3.) Database recovery and contingency business units or activities.
planning are more important than in 8.) True - For years, drastic changes took
the applications approach. place in the business environment due
4.) When more than one user attempts to to the widespread use of information
access data at the same time, the technology, new communication
database can face “contention” or means, and market globalization.
“concurrency” problems. 9.) Information system - It is a man-made
– Record locking can help mitigate such system that generally consists of an
problems but are beyond the scope of integrated set of computer-based
this course. components and manual components
5.) Territorial disputes over who “owns” established to collect, store and
the data, such as who is responsible for manage data and to provide output
data maintenance information to users.
(additions/deletions/changes) to 10.)Data conversion - This is where your
customer data. existing data from the current system
will be transferred to the new system.
11.)False - The goal of an organization is to
QUIZ # 1 add the least value at the lowest cost
thus increasing competitive advantage.
1.) Testing - This is where the proper 12.)Supplier Relationship Management -
documentation will be put to good use. This module manages the interactions
2.) Detailed Requirements Analysis - The with organizations that supply the
step where all end-users of the new goods and services to an enterprise
system will be interviewed. 13.)Training - In this stage, you can get a
3.) ERP systems - These are software sound input from your staff to improve
packages that can be used for the core the system.
systems necessary to support 14.)Documentation - This also plays a vital
enterprise systems. role and can be used as a tool for
4.) Accounting systems - It captures, stores, testing and training before rolling out
processes and communicates the system.
information in accordance with 15.)Scalability - Which of the following is
applicable professional, industry and not a basic function of Accounting
government standards and also meets Information System
the organization’s own requirements. 16.)Sales Force Automation - This module
5.) False - The economic events are the automates sales tasks such as order
system of activities that transform processing and tracking.
inputs into outputs valued by the
customer.
17.)Information - The most valuable
resources in accounting system.
18.)External - This type of transactions arise
from exchanges with outsiders such as
purchasing or selling goods and
services.
19.)False - The disadvantage of having AIS is
that it streamlines and automates
reporting, making everything just a few
clicks away when your company heads
require financial reports from your
team.
20.)Product Lifecycle Management - This
module manages product data from
design through disposal of product.