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Computerized Accounting Systems

Financial Accounting
Information for Decisions

Ingram and Albright

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Objectives

Once you have completed this chapter, you should be able to

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Objectives
1. Identify the primary components of a computerized accounting system. 2. Describe the components of a computerized accounting system used to process data and produce useful information. 3. Describe how data are processed in various modules of an accounting system.
Continued

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Objectives
4. Explain the use of relational databases to perform accounting functions. 5. Describe how a database system can be used to create a simple accounting system.

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Objective

Identify the primary components of a computerized accounting system.

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Components of a Computerized Accounting System

Systems that integrate most of the business information functions as a basis for management decisions are referred to as enterprise resource planning (ERP) systems.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System

The sales module receives order data from customers and maintains accounts receivable information.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System

The purchasing and inventory management module provides purchase order data to vendors.
Vendors are those who supply specific products to a company.

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Components of a Computerized Accounting System

The purchasing and inventory management module maintains accounts payable and inventory information.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System The human resources module maintains data about employees, including hours worked and wage rates.
It is used for preparing payroll and payroll tax information.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System The production module tracks the flow of costs through the manufacturing process.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System The asset management module identifies long-term asset costs, their expected useful lives, and where these assets are located in the company.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System The financial management module keeps track of debt, repayment schedules, interest rates, and shareholder information.

Exhibit 1

Components of an Accounting Information System

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Components of a Computerized Accounting System The general ledger/financial reporting module provides information for use by external stakeholders, including shareholders and government regulators.

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Subsidiary Accounts
Subsidiary accounts include transactions for individual customers, suppliers, or products. Records for all subsidiary accounts of a particular type are maintained in a subsidiary ledger.

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Subsidiary Accounts
A subsidiary accounts receivable ledger would consist of all the individual customers accounts, with data about purchases and payments for each customer.

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Control Accounts
Control accounts are summary accounts that maintain totals for all subsidiary accounts of a particular type.
Example: The balance for Accounts Receivable control account is the sum of the balances of all customer accounts.

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Control Accounts

Records for each control account are maintained in a companys general ledger.

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Objective

Describe the components of a computerized accounting system used to process data and produce useful information.

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Exhibit 2

Data Processing in a Computerized Information System

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Using computer networks, such as the Internet, to make customer sales is referred to as E-business.

Application software includes the computer program that permit data to be recorded and processed.

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A database is a set of computerized files in which company data are stored in the form that facilitates retrieval and updating of the data.

A database management system controls database functions to ensure data are recorded properly and are accessed only by authorized users.

Exhibit 4

A Computer Network

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A computer network is a set of hardware devices that are linked so they can exchange data among themselves using software.

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Objective

Describe how data are processed in various modules of an accounting system.

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Exhibit 5

A Sales Processing Module

sales order

Customer

Sales

Customer files

Sales files
invoice cash

Accounting General Ledger files Shipping Inventory files

goods

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The Sales Module

Good internal controls requires that the personnel who account for the cash should not also have physical access to the cash.

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The Sales Module

Accounts receivable and sales revenue transactions are recorded at the time goods are shipped to customers.

Cash and accounts receivable transactions are recorded when cash is received.

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Exhibit 6

A Purchasing and Inventory Management Module

purchase order

Vendor

Purchasing

Vendor files

invoice cash

Accounting

General Ledger files

goods

Receiving

Inventory files

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The Purchasing and Inventory Management Module

The interaction of a company and its suppliers is known as supply-chain management.

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Exhibit 7

A Human Resources Module

Time worked

Employee

Production

Production files

Cash Cash and payroll tax information

Accounting

General Ledger files

Governments

Personnel

Employee files

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The Human Resources Module

The human resource function in a business is responsible for hiring and training employees. The data needed to account for employee activities involve employees hours and their wages or salaries.

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Exhibit 8

A Production Module
Orders/ forecast

Sales

Manufacturing

Inventory files Employee files

Cost accounting

General Ledger files

Stores/ warehouse

Plant Asset files

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The Production Module

A special accounting function, known as cost accounting, keeps track of the costs of resources used in the manufacturing process.

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Objective

Explain the use of relational databases to perform accounting functions.

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Relational Database
A relational database is a set of related files that are linked so that files can be updated and information can be retrieved from the files efficiently.

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Relational Database
A table is a file that contains data represented as rows and columns. Each column identifies a particular attribute of the entity or process described in the table.
Each attribute in the table is referred to as a field.

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Relational Database
Each table contains one or more primary keys that uniquely identifies the entities or processes recorded in the rows of the table.

The primary key is used to connect the tables into relationships.

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Relational Database
The primary key in one table connects to the primary key or a foreign key in another table. A foreign key is a field that is a primary key in a different table.

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Objective

Describe how a database system can be used to create a simple accounting system.

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Copying and Opening the Database

It is highly recommended that the database be copied to a hard drive before it is used.

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Copying and Opening the Database

It is a good idea to make several copies of the database under different names.

FavoriteCookies1.mdb, FavoriteCookies2.mdb, and so on

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Database Contents
Tables contain the data stored in the system. Queries are short programs that permit a user to obtain data from one or more tables. Forms provide a means for entering or reading data stored in the database. Reports provide summary information intended primarily to be printed.
Continued

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Database Contents
Macros are sequences of steps a user performs to complete a particular task. Pages provide a means of creating web documents for accessing a database. Modules are computer programs to provide higher level functions in the database.