1 Accounting Information Systems: A Business Process Approach Chapter Eight: Using Accounting Applications

2 Learning Objectives After completing this chapter, you should understand: §Accounting application and modules §Typical elements in an AIS menu §The four processing modes §The use of accounting packages for real-time and batch processing §Posting to the general ledger §The purging of record

3 Learning Objectives (Continue) After completing this chapter, you should be able to: §Identify menu option required for an application §Identify the effect of various processing option on events and master tables §Identify the effect of various processing option on reports §Identify controls used to address risks under various processing option

4 Exhibits: 8.5 Tables:

5 Exhibit 8.5 Caution when Purging The following are excerpts from the rules concerning what is not purged when using the purge process in Peachtree, v.6.0:  If the transaction is dated after the purge date, then it is saved.  If the transaction is a payroll check and it is in or after the current payroll year, then it is saved.  If the transaction is a purchase or sale invoice and it is not fully paid off as of the purge date, then it is saved.  If the transaction is a cash receipt or cash disbursement and it is applied to a saved invoice, then it is also saved.  If the transaction is a sale or purchase and has related payments that have already been saved, then it is also saved. Source: Peachtree Accounting Help, Copyright © 1992–1998, Peachtree Software, Inc. All rights reserved.

6 Table 8.1 Similarities between Modules and Application Menus PurchasingSalesInventoryGeneral Ledger ModuleModuleModuleModule Master records toSupplierCustomerProductG/L Account maintain Events to recordPurchase orderCustomer order Inventory adjustments Journal entries Receipt of goodsDelivery of goodsor services PaymentCollection of cash Examples of eventDaily list ofDaily list of salesAdjustments reportGeneral journal reportspurchases Examples of statusOpen payablesAged accounts Inventory stock status Trial balance reportsreceivable

7 Table 8.2 Requirement for Event Tables for H & J Tax Preparation Service PossibleUpdates to EventTableEvent Tables UsedMaster Tables E1Make appointmentAppointmentNo. calendar E2Request serviceServiceNo. The narrative suggests Requestthat service request infor- mation is not entered into the computer. The secretary enters information into the computer only after the service is complete. E3Complete tax returnServiceNo. Tax return tables are Providedstored by Mega-Tax, and paper evidence of completion of tax return is given to the secretary by the accountant. E4Bill clientInvoiceYes. Service details areNarrative suggests customer’s entered into the computerBalance is increased, and the at this time, and the Year-to-Date_Revenues invoice is prepared.amount for each service provided is updated. Thus, the Client and Service tables are updated. E5Collect cashCash ReceiptYes. The Collection_Date Narrative suggests customer’s Invoice#, Amount, andBalance is decreased. Thus, Check# are recorded.Client Table is updated.

8 Table 8.3 Sample Data for H & J Tax Preparation Service Service Table Year-to-Date Service#Service DescriptionFee_Revenues 1040Federal Individual Income Tax Form 1040 (long form)$100$120,000 Sch-A1040 Schedule A (itemized deductions)$50$51,000 Sch-B1040 Schedule B (interest & dividend earnings)$50 $53,300 Sch-C1040 Schedule C (sole proprietorship)$110 $84,000 StateState Income Tax Return$80 $81,000 CorpCorporate Income Tax $30 (per hr.) $103,000 Client Table Client#Client_NameAddressTelephoneBalance_Due 1001Robert Barton242 Greene St., St. Louis, MO $0 1002Donna Brown123 Walnut St., St. Louis, MO $0 1003Sue Conrad565 Lakeside, St. Louis, MO $390 Accountant Table Accountant#Accountant_Name Jane Smith Michael Speer

9 Table 8.3 Sample Data for H & J Tax Preparation Service (Concluded) Invoice Table InvoicePostG/L_Post Invoice#Request#Client#Accountant#_DateAmountStatus_Date_Date /13/03$280closed02/13/0302/28/ /22/03$390open02/22/0302/28/ /23/03$180closed02/23/0302/28/03 Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “closed” if paid, “open” if not Cash_Receipt Table Receipt#Invoice#Collection_DateCheck#AmountPost_DateG/L_Post_Date /01/03125$23003/01/ /03/03316$18003/03/03 Invoice_Detail Table Invoice#Service#Fee $ Sch-A$50 305State$ $ Sch-A$50 306Sch-B$50 306Sch-C$ State$ $ State$80

10 Table 8.4 Additional Data for H&J Tax Preparation Service Information obtained about new clients: Balance Client#Client NameAddressTelephone _Due 1004Roger Longman922 Carlton, St. Louis, MO $0 1005Jeff Parker198 Hillside Dr., St. Louis, MO $0 1006Jane Kimball461 Tucker Rd., St. Louis, MO $0 Information about service requests recently completed: Request#Client#Accountant#Invoice_DateAmount /03/03$ /03/03$ /03/03$180 Request#Service#Fee $ Sch-A$50 107Sch-B$50 107State$ $ State$ $ State$80

11 Table 8.5 Effect of Recording Invoice# 308—Real-Time System Service Table Year-to-Date Service#Service_DescriptionFee_Revenues 1040Federal Individual Income Tax Form 1040 (long form)$100$120,100 Sch-A1040 Schedule A (itemized deductions)$50$51,050 Sch-B1040 Schedule B (interest & dividend earnings)$50 $53,350 Sch-C1040 Schedule C (sole proprietorship)$110 $84,000 StateState Income Tax Return$80 $81,080 CorpCorporate Income Tax $30 (per hr.) $103,000 Client Table Client#Client_NameAddressTelephoneBalance_Due 1001Robert Barton242 Greene St., St. Louis, MO $0 1002Donna Brown123 Walnut St., St. Louis, MO $ Sue Conrad565 Lakeside, St. Louis, MO $ Roger Longman922 Carlton, St. Louis, MO $280 Accountant Table Accountant#Accountant_Name Jane Smith Michael Speer

12 Table 8.5 Effect of Recording Invoice# 308—Real-Time System (Continued) Invoice Table InvoicePostG/L_Post Invoice#Request#Client#Accountant#_DateAmountStatus_Date_Date /13/03$280closed02/13/0302/28/ /22/03$390open02/22/0302/28/ /23/03$180closed02/23/0302/28/ /03/03$280open03/03/03 Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “open” if not paid, “closed” if paid Invoice_Detail Table Invoice#Service#Fee $ Sch-A$50 305State$ $ Sch-A$50 306Sch-B$50 306Sch-C$ State$ $ State$ $ Sch-A$50 308Sch-B$50 308State$80

13 Table 8.5 Effect of Recording Invoice# 308—Real-Time System (Concluded) Cash_Receipt Table Receipt#Invoice#Collection_DateCheck#AmountPost_DateG/L_Post_Date /01/03125$23003/01/ /03/03316$18003/03/03 Recording and posting Invoice# 308 caused three changes to tables in the sales module. 1. File maintenance: Because this is an event for a new customer, a record has been added to the Client Table for Roger Longman. 2. Event recording: One record was added to the Invoice Table (#308) and four records to Invoice_Detail Table. Invoice table now shows the posting date (PostDt) 3. Master file update: Year-to-Date_Revenues (in the Service Table) for the four services used per Invoice# 308 increased by $100, $50, $50, and $80.

14 Table 8.6 Invoice Table—Before Batch Recording InvoicePost G/L_Post Invoice#Request#Client#Accountant#_DateAmountStatusBatch#_Date_Date /13/03$280closed107002/13/03 02/28/ /22/03$390open107102/22/03 02/28/ /23/03$180closed107202/23/03 02/28/03 Post_Date = date that invoice information was posted to tables in the sales module (Services and Client tables); G/L_Post_Date = date that invoice information was used to update the general ledger module; Status = “open” if not yet paid, “closed” if paid

15 Table 8.7.A Invoice Table—After Batch Recording InvoicePostG/L_Post Invoice#Request#Client#Accountant#_DateAmountStatusBatch#_Date_Date /13/03$280closed107002/13/0302/28/ /22/03$390open107102/22/0302/28/ /23/03$180closed107202/23/0302/28/ /03/03$280open /03/03$180open /03/03$180open1073

16 Table 8.7.B Invoice_Detail Table—After Batch Recording Invoice#Service#Fee $ Sch-A$50 305Sch-B$50 305State$ $ Sch-A$50 306Sch-B$50 306Sch-C$ State$ $ State$ $ Sch-A$50 308Sch-B$50 308State$ $ State$ $ State$80

17 Table 8.8 Batch Recording: Tables After Posting Batch# 1073 (Compare to Table 8.3 which shows the tables before posting.) Service Table Year-to-Date Service#Service_DescriptionFee_Revenues 1040Federal Individual Income Tax Form 1040 (long form)$100$120,300 Sch-A1040 Schedule A (itemized deductions)$50$51,050 Sch-B1040 Schedule B (interest & dividend earnings)$50 $53,350 Sch-C1040 Schedule C (sole proprietorship)$110 $84,000 StateState Income Tax Return$80 $81,240 CorpCorporate Income Tax $30 (per hr.) $103,000 Client Table Client#Client_NameAddressTelephoneBalance_Due 1001Robert Barton242 Greene St., St. Louis, MO $0 1002Donna Brown123 Walnut St., St. Louis, MO $ Sue Conrad565 Lakeside, St. Louis, MO $ Roger Longman922 Carlton, St. Louis, MO $ Jeff Parker198 Hillside Dr., St. Louis, MO $ Jane Kimball461 Tucker Rd., St. Louis, MO $180

18 Table 8.8 Batch Recording: Tables After Posting Batch# 1073 Invoice Table InvoicePost G/L_Post Invoice#Request#Client#Accountant#_DateAmountStatusBatch#_Date _Date /13/03$280closed107002/13/03 02/28/ /22/03$390open107102/22/03 02/28/ /23/03$180closed107202/23/03 02/28/ /03/03$280open107303/03/ /03/03$180open107303/03/ /03/03$180open107303/03/03 The Invoice_Detail and Cash_Receipt tables are not shown here because the records were unchanged by the process of posting the purchase invoices.

19 Table 8.9 Immediate and Batch Recording Configurations Immediate RecordingBatch Recording Real-time Batch Update On-line Off-line Data entry: Are event data recorded in an eventYes Yes No No table as soon as an event occurs? Edit: Are data edited at the time of data entry?Yes Yes Yes No Edit report: Is an edit report required before posting?No Yes Yes Yes Update: Are summary fields in resource or agentYes No No No records updated close to the time when the event occurred? Status report: Are events included in resource orYes No No No agent status reports close to the time when they occurred?

20 Table 8.10 Invoice Table InvoicePostG/L_Post Invoice#Request#Client#Accountant# _DateAmountStatusBatch#_Date_Date /13/03$280closed107002/13/0302/28/ /22/03$390open107102/22/0302/28/ /23/03$180closed107202/23/0302/28/ /03/03$280open107303/03/ /03/03$180open107303/03/ /03/03$180open107303/03/03

21 Table 8.11 Recording and Updating Alternatives—Modules and General Ledger RecordingUpdateUpdate ProcessEventModule*General Ledger Real-timeIII Real-timeIIB Batch updateIBB Batch recordingBBB I = immediate (as soon as the event occurs), B = batch *Update of the module where the event was initially recorded