Chap11

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-

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-

Environment A Model of an Accounting Information System Information Data Management Data processing software Transform Accounting Information System Database Output physical resources Environment 11- Input physical resources

Data Processing Tasks 1. Gather data Each transaction is documented What happened? When did it happen? How much (volume, value)? Transactions describe 11-

2. Manipulate data Classify (use codes) Sort Calculate Summarize Data Processing Tasks [cont.] 11-

3. Store data Describes each transaction Represents most of the database Data Processing Tasks [cont.] 11-

4. Document preparation Triggers By an action By a time schedule Hardcopy or on-screen Data Processing Tasks [cont.] 11-

Characteristics of the AIS Performs necessary tasks Standard procedures Detailed data Historical focus Provides minimal problem-solving information 11-

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

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-

Customers Management Distribution system Suppliers Sales orders Rejected sales order notices Invoices Statements Payments by customers Commitments Purchases orders Shipments Supplier invoices Supplier statements Payments to suppliers Stock Other reports Budget reports Balance sheet Income statement A Context Diagram of the Distribution System 11- Materials stockroom

Customers Sales Orders Rejected sales order notices Invoices Statements Payments by customers Receivables ledger data 1. Fill Orders Inventory ledger data Payables ledger data Other reports Budget reports Balance sheet Income statement Management Received items Purchasing data Commitments Purchase Orders 2. Order replenishment stock Shipments Supplier invoices Supplier statements Payments to suppliers Suppliers Stock Materials stockroom A Figure 0 Diagram of the Distribution System 3. Maintain general ledger 11-

Customers 1.3 Billing 1.1 Order Entry 1.4 Accounts receivable 1.2 Inventory Sales orders Rejected sales order notices Accepted orders Filled items Purchasing data Received items Inventory ledger data Receivables ledger data Billed orders Statements Invoices Completed orders Payments by customers 3 3 2 2 A Figure 1 Diagram of the Systems that Fill Customer Orders 11-

Purchasing data Commitments Suppliers Payments to suppliers Supplier statements Supplier invoices Payable ledger data Materials stockroom Stock Incurred obligations 2.2 Receiving Issued purchase order data Filled purchase orders Shipments Received items Purchase orders Received purchases 2.1 Purchasing 2.3 Accounts payable A Figure 2 Diagram of the Systems that Order Replenishment Stock 3 1 11- 1

3.1 Update general ledger Receivables ledger data Inventory ledger data Payables ledger data General ledger records Updated general ledger records General ledger Management report data 3.2 Prepare management reports Other reports Budget reports Balance sheet Income statement Management A Figure 3 Diagram of the Systems That Perform General Ledger Processes 11- 1 1 2

Fill Customer Orders Order entry Sales order form Inventory Process sales Process receipts Feed general ledger 11-

Customers Sales orders Edit rejects Sales order edit ejects 1.1.1 Edit order data Rejected sales order notices Edited orders Customer credit file Credit data 1.1.2 Computer credit check Edited and checked orders Credit Rejects Sales order credit rejects Accepted orders 1.1.3 Log in orders Order data Completed orders 1.1.4 Mark filled orders Date filed Order log A Figure 1.1 Diagram of the Order Entry System 11- 1.2 1.3

Backorder file 1.2.1 Check the balance on hand 1.2.2 Check the reorder point 1.2.3 Add received items 1.2.4 Provide general ledger data Item records Backorder records Inventory file Items available Updated item records Filled items Purchasing data Inventory file additions Inventory records Received items Inventory ledger data A Figure 1.2 Diagram of the Inventory System 2 2 Accepted orders 11- 1.1 1.3 3

Billing Invoice Note: 1. Customer data 2. Item data 11-

Customers 1.3.1 Obtain customer data Customer file 1.3.2 Prepare invoices Filled items Customer data Invoice data Billed orders Invoices Completed orders A Figure 1.3 Diagram of the Billing System 11- 1.2 1.1 1.4

Accounts Receivable Four separate triggers Today's sales Today's payments Time to send statements Need to provide general ledger data 11-

Billed orders Accounts receivable file Receivables ledger data Receivables records to delete New receivables Receivables records 1.4.3 Prepare statements Customers Payments by customers Paid receivables file Paid receivables records Statement records Statements A Figure 1.4 Diagram of the Accounts Receivable System 1.4.1 Add new receivables 1.4.4 Provide general ledger data 1.4.2 Delete paid receivables 11- 3 1.3

Order Replenishment Stock Purchasing Emerging technologies EDI ISDN Purchase order 11-

Supplier file Outstanding purchase order files 2.1.1 Select suppliers Purchasing data Past performance data Inventory and supplier data Purchase order data 2.1.2 Obtain verbal commitments Suppliers 2.1.3 Prepare purchase orders 2.1.4 Close out purchase orders Commitments Purchase Orders Issued purchase order data Incurred Obligations Purchase order records Filled purchase Orders Purchase records to close out A Figure 2.1 Diagram of the Purchasing System Purchase Order history file Removed purchase order records 11- 1 2.2 2.2 2.3

A Figure 2.2 Diagram of the Receiving System Suppliers Purchased items file 2.2.1 process receipts Materials stockroom 2.2.1 Notify other systems Purchased item data Issued purchase order data Shipments Stocks Receipt information Received items Filled purchase orders Received purchases 11- 2.1 2.1 2.3 1

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-

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

AIS is the Foundation System The AIS must be implemented first MIS DSS ES Depends on a well-designed AIS 11-

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-

Chap11

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