1. Core Concepts of ACCOUNTING INFORMATION SYSTEMS Moscove, Simkin & Bagranoff John Wiley & Sons, Inc. Developed by: Marianne Bradford, Ph.D. Bryant College

2. Chapter 6 Databases and Data Modeling Introduction Database Concepts Database Design and Data Modeling Database Structures, Object-Oriented Databases, and Multimedia Databases Database Management Systems

3. Database Concepts A database is a collection of data that is stored in related files. Reasons why databases are important are: Valuable information Volume Complexity Privacy Irreplaceable data Storage costs Internet users

4. To be useful, the data in an organization’s databases must be stored and organized efficiently. Three important concepts are 1.Data hierarchy 2.Data warehouses 3.Record structures Storing Data in Databases

5. Data Hierarchy Storing accounting data in computer files involves organizing the data into a data hierarchy. The lowest level of information in a file is a binary digit. Eight bits create a byte that represents a character. A data field combines several characters. A record combines related data fields. A set of records forms a file. A database is a collection of files that contain all the information for an application.

6. Characteristics of a Data Warehouse A data warehouse pools data from separate applications into a large common body of information. Characteristics of data warehouses 1.Data are “clean” of errors and defined uniformly. 2.Data are stored in several databases, not just one. 3.Data Warehouses span a longer time horizon than the company’s transaction systems. 4.The data relations are optimized for answering complex questions.

7. Advantages of Data Warehouse Make organizational information available on a corporate-wide basis, which is central to the concept of enterprise-wide databases. Facilitates data mining and enables users to identify target markets or its most desirable customers.

8. Record Structures and Record Keys The specific data fields in each record of a computer file are part of the record structure. Keys are identifiers for records: –Primary keys are unique to each record –Secondary keys are non-unique identifiers for records and used for searching files for specific information –Foreign keys enable database records to reference one or more records in other files

9. REA Framework An events-based accounting system (EBA) records activities simply because they happen not because the system requires it. The REA is a tool for designing databases. Using this model, an AIS captures data about an organization’s resources, events and agents (REA). Resources are an organization’s assets. Events are identifiable activities associated with a business processes. Agents are the people associated with business activities.

10. Normalization Flat files are files with no sequence or order to them, except perhaps chronological. Flat files make it almost impossible to find a particular record easily or use file data productively. Normalization is a process of examining and arranging file data in a way that enables designers to avoid problems when files are used or modified later.

11. First Normal Form A database is in first normal form (1NF) if all the record’s attributes (data fields) are well defined and the information can thus be stored in a flat file. Problems: –data redundancy –insertion anomaly –deletion anomaly

12. Second Normal Form A database is in second normal form (2NF) if it is in 1NF and all the data items in each record depend on the record’s primary record key. This approach results in a more efficient design and eliminates much of the first file’s data redundancy.

13. Third Normal Form Our goal is to create a database that is minimally in third normal form (3NF). A database is in third normal form if it is in second normal form and contains no transitive dependencies - i.e., no relationships in which data field A determines data field B.

14. Entity-Relationship Modeling An entity-relationship (ER) diagram graphically depicts a database’s contents. Entities are resources, events and agents. ER diagrams depict entities being modeled and the relationships (cardinalities) among them.

15. The E-R model uses diamond symbols to represent relationships. E-R diagrams include symbols (“1” or “*”) that provide information on cardinality. The cardinality of a relationship describes the number of occurrences of one entity that may be associated with a single occurrence of the other entity. Entity-Relationship Modeling

16. Cardinality Relationships One-to-one (1:1) One-to-many or many-to-one (1:*), (*:1) Many-to-many (*:*) Cardinalities provide useful information about the nature of the company being modeled and the business policies that it follows.

17. User Views Schemas and Subschemas The database schema is a map or plan of the entire database. Any particular user or application program will be interested in only a subset of the schema, called the subschema. A database must be flexible enough to satisfy the subschema uses required.

18. Online Analytical Processing Complex multidimensional data analysis performed on database information is called online analytical processing (OLAP). OLAP packages allow end users to perform their own database analysis, including data mining.

19. Data Dictionaries A data dictionary describes the data fields in each database record. It is usually a separate computer file that is created and maintained by the administrators of the database. Uses –Documentation aid –Audit trail –Investigating internal controls

20. Database Concerns for AISs Data integrity Processing Accuracy and Completeness Concurrency Security

21. Database Structures A particular method used to organize records in a database is called the database’s structure. The objective is to develop this structure efficiently so that data can be accessed quickly and easily. Three types of structures are: 1) hierarchical, 2) network and 3) relational.

22. Hierarchical Structures Accounting data are often organized in a hierarchy. A hierarchical structure has successive levels of data in an inverted treelike pattern, also known as tree structures. Higher level records are parent records and lower level records are child records. Two records on same level are sibling records.

23. Network Structures Databases can use a network structure to link related records together and capture many-to-many relationships. The linking is accomplished with pointer fields. The pointers maintain the data relationships.

24. Relational Structures Relational databases are more flexible. Users can define relationships at the time the database is created or at later points in time.

25. Object-Oriented and Multimedia Databases The object-oriented database (OODB) contains both the text data of traditional databases plus information about the set of actions that can be taken on the data fields. Many OODBs are multimedia databases that include graphics, audio information and animation.

26. Database Management Systems A database management systems (DBMS) is a set of separate computer programs that enable users to create, modify, and utilize database information more efficiently. The data definition language (DDL) of a DBMS enables users to define the record structure of any particular database table. The data manipulation language (DML) enables users to perform tasks such as querying, changing records and deleting records.

27. Data Manipulation Languages Many relational databases support structured query language (SQL). Hypertext can also be used for finding information in a database. End-user programming allows users to perform their own data processing without technical assistance from IT professionals.

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29. Chapter 6