1 Chapter 1 Introduction to Accounting Information Systems Chapter 4 Database Management Systems

Learning Objectives Understand major approaches used to process data re accounting/business events Identify major accounting cycles Recognize complexities/limitations of traditional data management approaches Appreciate advantages of database approach to data management Understand basic processes of database design and implementation

3 Business Event Cycles (Merchandising) Revenue –Capture & record customer orders –Ship goods - record CGS –Send invoice - record Sales & A/R –Collect and record cash receipts

4 Business Event Cycles (Merchandising) (2) Expenditures –Prepare and record purchase orders –Receive goods and record cost of inventory –Receive vendor invoices; record Accts Payable –Prepare paychecks & record payroll activities –Prepare/record cash disbursements

5 Order Entry Process Billing/AR/ Receipts Process Inventory General Ledger REVENUE CYCLE EXPENDITURE CYCLE Business Even Cycles (merchandising) Purchasing/AP/ Disbursement Process

6 B/AR/CR Process General ledger P/AP/CD Process Service Firm Revenue Cycle

7 Integrated Production Process General ledger P/AP/CD Process Production Cycle

8 Event-Driven Approach Raw data captured as events occur Minimum data to be collected/stored –Who, What, When, Where Data can be aggregated to meet user requirements

9 Customer number Customer name Customer address Credit limit Sales- person Sales territory Year-to-date sales RECORD Fields Characters

10 Start New customer form Review & approve Enter customer data Input accepted New customer form Completed forms Credit DepartmentComputer Create customer record Customer master data Add customer record

11 Start New customer form Review & approve Enter customer data Input accepted New customer form Completed forms Credit DepartmentComputer Edit order, record order, update inventory, print shipping documents Inventory master data Customer master data Sales order master data Warehouse Packing slip Picking ticket Shipping Enter customer order

12 Data coding Sequential (serial) –Student ID numbers –“Wait” ticket at Post Office Example based on employee ID codes: – st hired – nd hired –etc Block –Universal product code – Mfg. code Product I.D. Example based on employee ID codes: fab dept assembly dept

13 Data coding (2) Significant digit Product group Part or subassembly WarehouseUnique item identifier Example based on employee ID codes Inventory item Work center Exempt or nonexempt Pay rate code Unique employee identifier

14 Data coding (3) Hierarchical Postal zip code Section of country Region within section Locality (town within region) Example based on employee ID codes Company division PlantDepartment Unique employer ID

15 Data coding (4) Mnemonic College course numbering: AC340 - Accounting Information Systems EN101 - English Composition Example Based on Employee ID Codes: F M C 623 FemaleMarriedCaucasianUnique employee ID

16 Application approach to data management Enter Inventory Transaction Inventory Application Programs Inventory Output Sales order master data Inventory master data

17 Record layouts - applications approach Sales order # Customer # Item #Price Sales Person Quantity Ordererd sales order record layout Item #Unit cost Warehouse location# Quantity ordered Sales order # Customer # inventory record layout Customer # Customer name Credit limit Sales Person Quantity ordered Sales order # customer record layout = key field

18 Database approach Decouples data from applications Data are independent Database shared by applications Data can be easily accessed by –Report generators –Query programs Must use DBMS + Operating system

19 Data base approach to data management Enter sales transaction Enter inventory transaction Sales application programs Inventory applications programs Data base management system software Operating system Report writer program Query Program Report request Query Online query response Report Data base

20 DBMS Set of integrated programs designed to simplify tasks of creating, accessing, managing databases Functions –defining data –defining relations among data –interfacing with operating system –mapping each user’s view of data –(subschema schema)

21 Schema/Subschema Customer # Customer name Credit limit Sales Person Customer address YTD SALES SCHEMA Customer # Customer name Sales Person YTD SALES SALES MANAGER SUBSCHEMA Customer # Customer name Credit limit CREDIT MANAGER SUBSCHEMA

22 Advantages of Database Approach Nonredundant data Ease of maintenance Reduced storage costs Data integrity Shareability/flexibility Privacy

23 Disadvantages of Database Approach High hardware/software cost Need for database administrator High concentration of applications on database Contention problems Training

24 ORDER CUSTOMER SALE INVENTORY made to received from line item fills Entity-relationship diagram

25 Specify Logical DB Design Select Logical DB model Transform Data Model using a Logical DB model Select DBMS Implement DBMS

Learning Objectives Understand major approaches used to process data re accounting/business events Identify major accounting cycles Recognize complexities/limitations of traditional data management approaches Appreciate advantages of database approach to data management Understand basic processes of database design and implementation