MANAGEMENT INFORMATION SYSTEMS 8/E Raymond McLeod, Jr.

and George Schell

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

Chapter 11
The Accounting Information System

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Copyright 2001 Prentice-Hall, Inc.

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Accounting Information Systems (AIS)

Gathers data describing a firms activity Transforms data into information Makes information available to users inside and outside the firm

A Model of an Accounting Information System

Environment
Information
Management

Data

Data processing software

Database
Accounting Information System

Input physical resources

Transform

Output physical resources

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Environment

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Data Processing Tasks

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

Data Processing Tasks [cont.]

2. 2.Manipulate 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

Data Processing Tasks [cont.]

4. Document preparation
Triggers
By an action By a time schedule

Hardcopy or on on-screen

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Characteristics of the AIS

Performs necessary tasks Standard procedures Detailed data Historical focus Provides minimal problemproblem-solving information Users

Sample AIS
The Distribution System
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

Customers

Sales orders

A Context Diagram of the Distribution System

Commitments Purchases orders

Rejected sales order notices

Shipments Supplier invoices

Invoices

Suppliers

Statements

Context level is overall system within environment Leveled and Balanced DFDs

Distribution system

Supplier statements

Payments by customers

Payments to suppliers Income statement

Balance sheet Budget reports

Stock

Materials stockroom

Management
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Sales Orders

Customers

Rejected sales order notices

Invoices Statements Payments by customers Receivables ledger data Inventory ledger data Received items

A Figure 0 Diagram of the Distribution System

Sales orders

Customers

Rejected sales order notices

A Figure 1 Diagram of the Systems that Fill Customer Orders

Accepted orders

1. Fill Orders
Purchasing data Commitments

Payments by customers

1.1 Order Entry

Filled items Completed orders Invoices

3. Maintain general ledger

Income statement

Payables ledger data Other reports Budget reports

2. Order replenishment stock

Purchase Orders Shipments Supplier invoices

1.2 Inventory

Suppliers

Balance sheet

Supplier statements Payments to suppliers

Billed orders

1.3 Billing
Purchasing data Inventory ledger data
3 3 2

Management
Stock

1.4 Accounts receivable

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Receivables ledger data

Materials stockroom

Received items

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A Figure 2 Diagram of the Systems that Order Replenishment Stock

Purchasing data 1 2.1 Purchasing Commitments Purchase orders

A Figure 3 Diagram of the Systems That Perform General Ledger Processes

1
Receivables ledger data Inventory ledger data Payables ledger data

Filled purchase orders

Issued purchase order data

Shipments

Suppliers

1 2

3.1 Update general ledger

General ledger records Updated general ledger records

Received items 1 2.2 Receiving Stock Materials stockroom

Supplier invoices

Management report data

General ledger

Received purchases Incurred obligations Payable ledger data 2.3 Accounts payable

3.2 Prepare management reports

Other reports Budget reports

Supplier statements Payments to suppliers

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Balance sheet Income statement

Management

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A Figure 1.1 Diagram of the Order Entry System

Fill Customer Orders

Order entry
Sales order form

Customers

Sales orders

Edit rejects

Rejected sales order notices

1.1.1 Edit order data

Edited orders

Sales order edit ejects Customer credit file

Inventory
Process sales Process receipts Feed general ledger
Accepted orders 1.2 1.1.3 Log in orders

Edited and checked orders

1.1.2 Computer credit check

Credit data

Credit Rejects Order data

Sales order credit rejects

1.3
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Completed orders

1.1.4 Mark filled orders

Date filed Order log

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A Figure 1.2 Diagram of the Inventory System

1.1
Accepted orders

Billing
1.2.1 Check the balance on hand
Item records Inventory file additions

1.2.3 Add received items

Received items

Invoice
Note:
1. Customer data 2. Item data
Inventory ledger data

Backorder records

Backorder file

Items available

Inventory file

Updated item records

Inventory records

Filled items

1.2.2 Check the reorder point

Purchasing data

1.2.4 Provide general ledger data

1.3

2
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1.2

Filled items

A Figure 1.3 Diagram of the Billing System

Accounts Receivable
Four separate triggers

1.3.1 Obtain customer data

Customer data

Customer file

Invoice data 1.3.2 Prepare invoices

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

Invoices Customers

Billed orders
1.4

Completed orders
1.1
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Billed orders 1.3

A Figure 1.4 Diagram of the Accounts Receivable System

New receivables Receivables records

Order Replenishment Stock

Purchasing
Emerging technologies
EDI ISDN

1.4.1 Add new receivables

Accounts Statement records receivable file

Receivables records to delete 1.4.2 Delete paid receivables

1.4.4 Provide general ledger data Receivables ledger data

1.4.3 Prepare statements

Statements

Purchase order

Payments by Customers customers

Paid receivables records

Paid receivables file

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A Figure 2.1 Diagram of the Purchasing System

Purchasing data
1 2.1.1 Select suppliers

Past performance data

Supplier file

A Figure 2.2 Diagram of the Receiving System

2.1
Issued purchase order data

Inventory and supplier data 2.1.2 Obtain verbal commitments

Purchase order data Issued purchase order data 2.1.3 Prepare purchase orders

Commitments
Suppliers

Purchased item data

Purchased items file

2.2 2.3

Purchase Orders Purchase order records Outstanding purchase order files

Shipments

Suppliers
Stocks

2.2.1 process receipts

Receipt information

Incurred Obligations

Purchase Order history file Removed purchase order records

Purchase records to close out Filled purchase Orders 2.2

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Materials stockroom

2.1.4 Close out purchase orders

Received items 1 2.2.1 Notify Filled purchase orders other 2.1 systems Received purchases 2.3

A Figure 2.3 Diagram of the Accounts Payable System

Accounts Payable
The firm pays suppliers when:
1. Stock was ordered (P.O. file copy) 1.Stock 2.Stock 2. Stock was received (Received purchases file) 3.Invoice 3. Invoice

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Incurred Obligations 2.3.1 Set up supplier payables records Received Purchases New Payables data

Payables Records

Payables Ledger Data 2.3.4 Provide general ledger data 3

Accounts payable file

Payables Records to delete Paid Payables Records

2.2

Received purchases file

Receipt Data
Payment data

2.3.3 Delete paid payables

Supplier Invoices

Paid payables file

Invoice and statement

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2.3.2 Make supplier payments

file Paid Supplier Data Invoice Data

Supplier statements

Suppliers
Payments to Suppliers
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AIS is the Foundation System

Summary
AIS maintains financial records of the firm Data processing components
Data gathering Data manipulation Data storage Document preparation

The AIS must be implemented first MIS Depends on a DSS well-designed AIS ES

AIS Subsystems AIS contributes to problem solving

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