MANAGEMENT INFORMATION SYSTEMS Raymond McLeod, Jr.

Chapter 12
The Accounting Information System

What is Data Processing?

Manipulation or transformation of symbols for the purpose of increasing their usefulness. Data processing and transaction processing are often used interchangeably.

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

Environment

Key Points:
1. Gathers only data relating to the firms activities 2. Transform data into information 3. Makes information available to
A. Management (inside) B. Environment (outside)

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 [continued]

2. Manipulate data
Classify (use codes) Sort Calculate Summarize (total, subtotal)

Data Processing Tasks -- Step 3

3. Store data Describes each transaction All the data kept in storage Represents most of the database

Data Processing Tasks -- Step 4

4. Document preparation
By an action By a time schedule

Characteristics of the AIS

Performs necessary tasks Standard procedures Handles detailed data Historical focus Provides minimal problem-solving information

Sample AIS
The Distribution System
Users
Manufacturers Wholesalers Retailers Can be : hospitals, etc

Note : data flows, data stores, and processes

Data Flow Diagram

Context diagram : highest level, presents the system in the context its environtment Leveled DFD : used in hierarchy Balanced DFD : system connections appear on all of the system levels

Levels of DFD
Context Diagram Level 0 : Process 1,2,3,. (figure 0) Level 1 : Process 1.1, 1.2 (figure 1) Level 2 : Process 1.1.1, 1.1.2 (figure 2)

DFD Symbols
External Entity(person, organization, another system) Process Data Flows Data Storage

Customers

Sales orders

A Context Diagram of the Distribution System

Commitments Purchases orders

Rejected sales order notices Invoices Statements Payments by customers

Shipments Supplier invoices

Suppliers

Distribution system

Supplier statements

Payments to suppliers Income statement Balance sheet Budget reports

Stock

Materials stockroom

Management
Other reports

Sales Orders

Customers

Rejected sales order notices Invoices

A Figure 0 Diagram of the Distribution System

Statements Payments by customers Receivables ledger data Inventory ledger data

1. Fill Orders
Purchasing data Received items Commitments

3. Maintain general ledger

Income statement

Payables ledger data Other reports Budget reports

2. Order replenishment stock

Purchase Orders Shipments Supplier invoices

Suppliers

Balance sheet

Supplier statements Payments to suppliers

Management
Stock

Materials stockroom

Sales orders

Customers

Rejected sales order notices

A Figure 1 Diagram of the Systems That Fill Customer Orders

Accepted orders

Payments by customers

1.1 Order Entry

Statements

Filled items Completed orders Invoices

1.2 Inventory

Billed orders

1.3 Billing
Purchasing data Inventory ledger data
3 3 2 2

1.4 Accounts receivable

Receivables ledger data

Received items

A Figure 2 Diagram of the Systems That Order Replenishment Stock

Purchasing data 1 2.1 Purchasing Commitments Purchase orders

Filled purchase orders

Issued purchase order data

Shipments

Suppliers

Received items 2.2 Receiving

1 Materials stockroom
Supplier invoices

Stock

Received purchases Incurred obligations Payable ledger data 2.3 Accounts payable

Supplier statements Payments to suppliers

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

1 1 2
Receivables ledger data Inventory ledger data Payables ledger data

3.1 Update general ledger

General ledger records Updated general ledger records

Management report data

General ledger

3.2 Prepare management reports

Other reports Budget reports

Balance sheet Income statement

Management

Fill Customer Orders

Order entry (1.1)
Edit order data (rejected sales order not.) Computer Credit check (credit limit) Log in orders (open order unfilled) Mark Filled orders

Inventory (1.2)
Check balance on hand (backorder) Check reorder point (stockout) Add Receiveed Items Provide General Ledger data

A Figure 1.1 Diagram of the Order Entry System

Customers
Sales orders Edit rejects

Rejected sales order notices

1.1.1 Edit order data

Edited orders

Sales Sales order order edit edit ejects ejects Customer Customer credit file credit file

Edited and checked orders

1.1.2 1.1.2 Computer Computer credit credit check check

Credit data

Accepted orders 1.2

Credit Rejects 1.1.3 Log in orders Order data

Sales order credit rejects

1.3

Completed orders

1.1.4 Mark filled orders

Date filed Order log

A Figure 1.2 Diagram of the Inventory System

1.1
Accepted orders

1.2.1 1.2.1 Check Check the the balance balance on hand on hand

Item records

Inventory file additions

1.2.3 1.2.3 Add Add received received items items

Received items

Backorder records

Backorder Backorder file file

Items available

Inventory Inventory file file

Updated item records

Filled items

1.2.2 1.2.2 Check Check the Purchasing data the reorder reorder point point 2

Inventory records

Inventory ledger data

1.2.4 1.2.4 Provide Provide general general ledger ledger data data

1.3

Billing (1.3)

Obtain customer data Prepare Invoices

1.2

Filled items

A Figure 1.3 Diagram of the Billing System

1.3.1 Obtain customer data

Customer data

Customer file

Invoice data 1.3.2 Prepare invoices

Invoices Customers Customers

Billed orders
1.4

Completed orders
1.1

Accounts Receivable (1.4)

Add new Receivables Delete paid receivables Prepare statements (current, past due, outstanding invoices) Prepare general ledger data

Billed orders 1.3

A Figure 1.4 Diagram of the Accounts Receivable System

New receivables Receivables records

1.4.1 Add new receivables

Accounts Accounts Statement records receivable receivable file 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

Payments by Customers customers

Paid receivables records

Paid receivables file

Order Replenishment Stock

Purchasing (2.1)
Select Supplier Obtain Verbal commitments Prepare Purchase orders Close out Purchase orders

A Figure 2.1 Diagram of the Purchasing System

Purchasing data
1 2.1.1 Select suppliers

Past performance data

Supplier Supplier file file

Inventory and supplier data 2.1.2 Obtain verbal commitments

Purchase order data Issued purchase order data 2.1.3 Prepare purchase orders

Commitments

2.2 2.3

Purchase Orders

Suppliers

Incurred Obligations

Purchase order records Outstanding Outstanding purchase purchase order files order files 2.1.4 Close out purchase orders

Purchase Purchase Order Order history file history file

Purchase records to close out Filled purchase Orders 2.2

Removed purchase order records

Receiving (2.2)
Process receipts Notify Other systems

A Figure 2.2 Diagram of the Receiving System

2.1
Issued purchase order data

Suppliers

Purchased item data

Purchased Purchased items file items file

Shipments Stocks

2.2.1 process receipts

Receipt information

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

Accounts Payable (2.3)

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

Account Payble
Setup supplier payable records Make suppier payments Delete Paid payables Provide General Ledger Data

A Figure 2.3 Diagram of the Accounts Payable System

2.1 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 Accounts payable payable file file

Payables Records to delete Paid Payables Records

2.2

Received Received purchases purchases file file

Receipt Data
Payment data

2.3.3 Delete paid payables

Paid Paid payables payables file file Supplier Invoices

2.3.2 Make supplier payments

Invoice and Invoice and Supplier statement statement statements file Paid Supplier file Data Invoice Data Suppliers Suppliers
Payments to Suppliers

The AIS is the first information-oriented CBIS subsystem to implement

MIS DSS ES
Depends on a good AIS Depends on a good AIS Depends on a good AIS